DISK DRIVES ON THE MOVE Once limited to PCs, devices fill many needs


SINGAPORE -- Automobiles with video map screens, copy machines that "remember" thousands of pages and "smart" homes that keep track of all your appliances are some of the new uses expected for disk drives, according to industry executives.

The growth of the disk drive industry has moved very rapidly but has so far suffered from excessive dependence on a single customer -- the personal computer manufacturer.

Over the next decade, however, manufacturers see several new markets for disk-drive storage devices as the demand for data spreads to other products.

Ten years ago, less than 10 percent of personal computers sold were equipped with hard disk drives, and a two-megabyte hard drive cost around $1,500. Now an estimated 90 percent of all personal computers are sold with hard disk drives and a 40-megabyte disk costs less than $200. One megabyte is the equivalent of a million bits of data.

While this growth has been dramatic, it has tied disk drive companies too closely to personal computer manufacturers.

But several advances are expected to greatly increase the industry's markets. Among the products likely to use disk drives: those that have a use for storing large chunks of information such as fax machines, or those that have previously relied on a mainframe but which could now have their own data base, such as bank teller machines.

Other expected uses include automobile navigation systems, which will provide extensive mapping capabilities, larger telephone answering systems or voice-mail systems for corporations and copy machines.

Finally there is a use in so-called "smart home" systems where a central processor would control temperature, appliances, lighting and security.

Part of these new uses are expected to result from the industry's ability to store more and more information in a smaller space.

Companies now find they must retool their entire plant every two years or less to keep up with the advances. Over the past few years, hard drives have shrunk from 8 inches, to 5.25 inches to 3.5 inches to 2.5 inches to the latest rage in the industry -- 1.8 inch drives.

Singapore became the world's largest disk-drive producer during the 1980s, initially by attracting U.S. companies looking for skilled, lower-cost labor and proximity to subcontractors.

"There's very good manufacturing technology," said Mike Morrissette, managing director for Western Digital. "You can concentrate on Just-In-Time. You don't have to worry, your supplier is right here."

But higher labor costs in Singapore, higher business costs and local-content rules in end-markets such as Europe could begin to erode Singapore's position. Industry officials see some companies moving more production to Scotland, Germany or France to satisfy local-content rules.

At the same time, as disks have gotten smaller and more powerful, transportation costs have become much less of a factor relative to total cost.

In 1990, Singapore shipped $4.18 billion worth of drives, up 31 percent from the $3.18 billion it shipped in 1989. The United States was the largest market, taking 48.8 percent of total units exported.

Put another way, disk drives made up just over 7.5 percent of the value of all Singapore's exports, but 20 percent of all Singapore exports to the United States.

Companies see a shakeout and consolidation period ahead for Singapore and the industry as a whole. Gus Hsu, Singapore director for Asia-Pacific sales for San Jose, Calif.-based Maxtor Corp., said there are just too many players.

"All the production capacity of all the players is much bigger than world demand," he said. "So there will be tough times for the smaller players. Definitely this year is not a good year."

According to Dataquest, an industry research firm, 29.9 million hard disk drives were shipped in 1991. Of the top eight players, six were U.S.-based with a cumulative market share of almost 75 percent.

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