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PC Market Improvements in 2H ’15 Should Bode Reasonably Well for HDDs

By now, it is no surprise that the HDD market has suffered at the hands of very weak demand for PCs. Compounding the lack of consumer PC purchasing is a major transition in Windows OS, with Windows 10 releasing on July 29. No OEM in its right mind wants to blow out obsolete inventory of Windows 8.1 systems, so PC builds through CQ1 and CQ2 of this year have shrunk to address the weak market conditions and to manage inventory cautiously.

Commercial PC demand is in a post-XP refresh lull, so what the market and industry is witnessing is true consumer PC demand – a segment of the market that has been weakened by competition for consumer spend for various other classes of mobile devices. In addition, hardware requirements to run PC software (with the exception of the latest games) have remained relatively static since the Windows 7 days, further demotivating consumers from choosing to upgrade to the unpopular Windows 8/8.1. With a new, and hopefully improved, Windows 10 on the horizon along with early Windows 7 PCs reaching five years in age, consumers may begin to find new reasons to replace Windows PCs, albeit at a gradual pace spread out over a couple of years.

With PC and component inventories leaned down to minimal levels, even the slightest increase in builds for the new OS, new chipset (Intel Skylake in late summer 2015) and very slight seasonal improvement in the 2H ’15 will invariably drive up demand for HDDs measurably. Since much of the build will be for consumer models, the impact of a growing SSD attach rate, which materially affects commercial PCs more than consumer notebooks, will likely not hit the HDD market with additional headwinds to demand.

TRENDFOCUS maintains an internal metric measuring a ratio of notebook PC shipments to net mobile HDDs (sans external models), which points to no recent build up of significant HDD inventory. While not an exact measure of inventory, the relative changes of this ratio have given us some insight into the relative health of the client HDD demand. If you are a TRENDFOCUS SDAS: HDD Information Service client, please feel free to contact us for a copy of this dataset. If you are not a client and are interested in our unique HDD and SSD market research services, please contact any analyst on our team, or send an inquiry to info@trendfocus.com.

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