Information Technology

May 31, 2006
Consumer devices containing HDDs gain market share

Rajesh Khurana

Seagate talked to Cindy McCurley, industry analyst at In-Stat/MDR, a leading research organisation in the area of digital communications. The company recently published a report on the fast-moving expansion of hard disc storage into the markets for mobile, digital devices. McCurley shared her insights into market developments and consumer interests, and described how consumers have learned to appreciate storage in their buying decisions, and how new vendors can access the vast mobile market.

NEW DELHI -- In-Stat/MDR recently published a report 'Hard Disk Drives For Consumer Electronics: Beyond the PC'.

According to the report, the number of consumer devices containing HDDs will balloon over the next few years, from approximately five percent of the world's HDD market in 2003 to close to 33 percent by 2008.

The research considered several types of products that are already widely used, such as digital music players, personal video recorders (PVRs) and video game consoles, as well as emerging and primarily mobile devices. The latter include PDAs, handheld global positioning systems (GPSs), digital cameras and camcorders, and mobile phones. As product adoption and markets grow, each of these might become a category to watch on its own. As far as storage is concerned, all of the emerging products will be using the so-called micro drives, HDDs of one-inch or smaller size.

Digital music players, according to McCurley, will continue to play a large role in the growth of the mobile consumer electronics market of devices that include a hard drive. Up from approximately 2.2 million units in 2003, In-Stat/MDR has previously forecast about a 64 percent CAGR over the period from 2003 to 2008.

Consumers have learned to care about storage

Storage has become a critical consideration for people selecting mobile digital devices. "Consumers have become aware of storage as something they need to think about when they make a purchasing decision," explained McCurley. "This is a strongly growing trend that has become prominent over the last twelve months. Stemming from a growing interest in storage capacity for the PC, consumers are increasingly concerned about having enough space for their growing libraries of digital content."

Design is the next-ranking factor in consumer decisions. People like their personal electronic devices to reflect their own aesthetics and present an attractive, compelling appearance. Questions of functionality and usability play a smaller, but significant, role. Prospective purchasers frequently will conduct their own research online and through other sources to judge how well a product might work for them. Price is also important, but does not play as large a role as one might think.

As McCurley said, handheld music players have given an interesting illustration of consumer behavior in this market. "The expense is not insignificant, but that has not turned customers away. But what does make a difference to people is the usability and design of the product, in conjunction with the storage capacity."

Understanding of diverse markets key for competing vendors

McCurley is asked how a relative newcomer without the brand recognition and financial resources of an established industry leader could position itself in the mobile consumer market. After all, vendors catering to the retail market must compete for a limited amount of shelf space, trim their margins, and be able to meet a sudden spike in demand by shipping a large volume of product units. When storage capacity alone is not enough to create a competitive edge, and price is not necessarily a prime consideration for customers, vendors can do well with unconventional marketing approaches and striking product design.

iRiver, headquartered in Korea and active worldwide, exemplifies this strategy. Till recently the company had little presence in the US market, but now it ranks as one of the top vendors of portable digital music players worldwide. "They realised they couldn't compete by using the same strategies as larger electronics firms with recognised brands. So they sought out sporting events, awards shows and other opportunities, targeting a young, hip, urban audience. They practiced guerrilla marketing, using a wide range of relatively small-scale, well-focused activities. And it worked," McCurley added.

Having found success in its initial target market, iRiver was able to expand into other demographic and geographic areas. The company has also expanded into Europe.

"You need to target a market that you know well. Have a design that is likely to be popular in the local culture, and a product with features that people want, at an acceptable price. Don't expect to serve global markets with a single product," noted McCurley.

Vendors need to understand that consumer markets in Asia, Europe and the US may differ widely in what they expect from a portable digital device, and in how quickly they may be ready to adopt it. In addition, McCurley pointed out that digital music players and other consumer devices have become trendy fashion accessories, whose colours, shapes, and product personalities are of great importance to consumers. "Admittedly, that may be a bit of a stretch if you're used to focusing on disc drive storage and the technical capabilities of devices," she added, "but it's also a great opportunity to bring your brand to life in the consumer market."

Ease of use and expanding audiences

Generally, ease-of-use matters to consumers, even as they become more comfortable with burning their own CDs and performing other technical functions that would have been prohibitive not too long ago. Features such as the USB interface, which made it easy for consumers to connect devices to their PCs without going through an installation routine, have greatly increased the comfort level of consumer audiences. McCurley noted that the age demographic for mobile digital devices is expanding to include users who are not the traditional, young, technology-savvy, early adopters.

By offering a comfortable and easy user experience, software innovation can drive adoption of mobile consumer devices in new market segments. The intuitive user interface of the Apple iPod is still a major factor in the product's appeal. McCurley also cited the new Microsoft Media Player 10 as another positive example. She said: "Media Player 10 makes it easy to transfer files onto a device. In addition, Microsoft's digital rights management technology provides a way to protect the integrity and value of digital content."

Greater variety of products yet to come

According to McCurley, customers are always looking for things that are new and different, and competition will become more intense. Competition is heating up, with new and existing companies such as Apple, Rio, and Creative now offering compelling products with distinctive form factors and colors to compete more effectively for the consumer's dollar.

"Outside of the music market, handheld audio and video players and other personal media players will increasingly incorporate micro disc drive storage," McCurley stated. She expected vendors to continue to increase storage capacities of such devices.

She sees a lot of room for technology vendors to develop and offer additional consumer products with hard drive storage. "As of today, what we termed an emerging category in our research is still just that," McCurley added. "We will probably see much greater variety than the small numbers of mobile phones and handheld GPS systems available today. Once that market is fully developed, technical feasibility will determine what other products may benefit from integrating hard drives."

(The author is the country manager of Seagate, India and SAARC, Seagate)