Hard disk-drive manufacturers repositioned themselves in the Great Recession, managing to show growth in 2009.

The market grew nearly 11% on a unit basis in 2009 and is slated to grow another 11% in 2010, according to our analysis. Desktop PC sales were stronger than many industry executives and analysts had expected as the fourth quarter saw a big rush to desktop PCs. There was strength in China. Full-size desktop PCs are a status symbol in that nation, as compared with smaller notebooks or netbooks. Shipments also are continuing to rise for external drives used for the storage of gaming, music and movies.

The market for 2009 was about product mix. Seagate ( STX) leads in the desktop and the enterprise markets, which were down for 2009, while Western Digital ( WDC) has focused on non-desktop applications, primarily the 2.5-inch form factor for mobile and CE, which are up in 2009.

Seagate ended the year as the market leader again, with shipments of 174.8 million drives, slightly ahead of Western Digital which shipped 165.2 million drives. Seagate and Western Digital also benefited from paring costs in the downturn, helping to make the profit turnaround so dramatic.

As shown in the table, Seagate increased shipments by 2.2% year over year while Western Digital increased shipments 13.1%. Since total shipments for the hard-disk industry increased nearly 11%, Seagate lost share while Western Digital increased share.

The 1.8-inch form factor drives used in the smallest mobile devices took the greatest hit. Shipments dropped in half to less than 11 million units, as solid state drives (SSDs) using NAND flash have taken over the sector.

Apple ( AAPL) consumes almost one-third of total NAND flash output for its Mac, iPod and iPhone products, and could tighten supply again with the potential success of the iPad, the sources indicated. The high cost of NAND flash has been a major factor in slowing down the adoption of SSDs in the PC sectors even during a challenging 2009.
Robert N. Castellano, Ph.D, is President of The Information Network, a leading consulting and market-research firm for the semiconductor, LCD, HDD and solar industries. Castellano is internationally recognized as one of the leading experts in these areas. He has nearly 25 years of expertise as an industry analyst. Castellano has provided insight on emerging technologies to many business and technical publications, including Business 2.0, BusinessWeek, The Economist, Forbes, Investor's Business Daily, Los Angeles Times Magazine, The New York Times, USA Today and The Wall Street Journal. He is a frequent speaker at conferences and corporate events. He has over 10 years' experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University before founding The Information Network in 1985. He has been editor of the peer-reviewed Journal of Active and Passive Electronic Devices since 1985. He is author of the book "Technology Trends in VLSI Manufacturing," published by Gordon and Breach. His book "Solar Cell Processing" was published in 2009 by Old City Publishing. He received his Ph.D. in solid state chemistry from Oxford University.