Not so long ago, analysts were getting ready to bury the hard drive, saying that sexier, more compact flash memory would supplant the venerable, electro-mechanical technology.
It hasn't happened. And a new report by Credit Suisse indicates that hard drives will retain a key advantage -- price -- over flash until at least 2012.
"The reality is that consumers are unwilling to pay a premium for high-end performance or new technologies in their PCs," analyst Robert Semple wrote in a note to clients.
That's not to say there's no market for NAND, the most popular flavor of flash. Small consumer gadgets with relatively limited capacity, or devices that need to be hardened against vibration or impact, will continue to be excellent markets for the chips.
Indeed, Semple is careful to note that the two technologies are likely to coexist for some time to come. "In reality, the discussion between hard drives and NAND flash does not have to be an either/or scenario, rather, the likelihood of some form of peaceful coexistence is almost inevitable" wrote Semple.
Still, the report's conclusions are good news for leading hard-drive vendors, including
, and component suppliers such as
Based on semiconductor technology,
flash memory is faster, weighs less and requires less power than hard drives. But it's significantly more expensive.
Flash makers, particularly Samsung, the leading maker of NAND products, have been predicting that prices per gigabyte would come down relatively quickly. Moreover, they've said there is a whole new market for flash in the hard-drive business' home turf: PCs.
Neither prediction has been fulfilled. Hard-drive makers continue to make technological improvements that lower the unit cost of conventional storage. Additionally, the projected market for PCs equipped with flash as a main form of storage isn't materializing.
Seagate CEO Bill Watkins says he expects Vista,
newest version of Windows, to spur demand for hybrid hard drives containing a small amount of flash memory.
One obvious application: enabling so-called instant on (it isn't really instant), which sharply reduces the amount of time it takes to boot a computer.
And like Semple, whose firm, Creidt Suisse, is seeking investment-banking business with Seagate, Watkins believes that hard drives and flash will continue to coexist, although he says flash "will never" be as cheap as hard drives.
Consumer-electronic devices account for roughly 6% or 7% of Seagate's business, but that number actually understates the impact of the digital boom on his company, Watkins says.
As consumers carry around more and more digital content, they need to keep backup copies on their PCs, which use hard drives. Moreover, major digital-content providers are buying more and more servers with larger, higher-margin drives to store video.