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HDD Shortage May Incentivize More Sophisticated Storage Management

By Thor Olavsrud (Send Email)
Posted December 12, 2011


As the hard disk drive (HDD) industry begins to take stock of the damage wrought by the worst flooding to hit Thailand in decades -- the floods this monsoon season deluged at least 58 of its 76 provinces and were responsible for more than 600 deaths -- related industries have begun to feel the effects, and enterprise storage is likely to be among them.

"I don't know that we're necessarily seeing all the effects yet," Mark Peters, a senior analyst with Enterprise Strategy Group (ESG), said. "I'm not sure the real impact of the shortages has hit yet."

HDD factories in Thailand accounted for 40 percent to 45 percent of worldwide HDD production in the first half of 2011, according to research firm IDC. As of the beginning of November, nearly half of the country's HDD production capacity was directly affected by the flooding. Assembly and component facilities were also flooded.

PC vendors have been forced to lower their production because of the shortage, and this in turn has affected vendors of microprocessors, like Intel. Intel (NASDAQ:INTC) on Monday lowered its fourth quarter revenue guidance by $1 billion, citing a slowdown in orders of microprocessors as PC manufacturers realign their backlog to account for the hard drive shortage. Last week, both Texas Instruments and Altera lowered their guidance as well.

In the storage space, Peters predicted vendors would start pushing a number of technologies to help their clients deal with the shortage.

"The thing to watch is what palliatives the vendors will look to in an effort to limit the extent of the problem for their clients," he said. "I think there will be ever-increasing emphasis on things like thin provisioning, using tiering, using deduplication, perhaps solid state storage."

In other words, organizations are going to do what they can to squeeze more utilization out of their existing capacity and may be inspired to turn to more sophisticated forms of storage management as a result. Organizations may just give information lifecycle management (ILM) technologies another look.

"I think what's logical. If you look at the storage hierarchy, you've got silicon stuff, you've got spinning stuff and you've got rusty tape stuff," he said. "If the spinning stuff gets hard to get, it's likely people are going to look to the silicon stuff or the rusty tape stuff to put their data on. If you're already a tape user and you move data off disk to tape after 90 days, maybe you change it to 75 days."

What's more, he said, organizations that do change their habits as a result of trying to use storage more efficiently are likely to change their habits for good.

"We live in a pretty conservative industry for the most part," he said. "Efficiency is becoming more important, but it's usually second tier. But if this shortage inspires people, forces people, motivates people to try different ways of doing things, they could very easily become new norms. I think we're definitely going to see more usage of storage virtualization and thin provisioning and tiering."

Intel Chief Financial Officer Stacy Smith said Monday he believes the hard drive shortages will last through the first quarter of 2012, with supply catching up with demand some time in the first half of the year.

Stifel Nicolaus Analyst Aaron Rakers agreed.

"We estimated HDD production levels in the 110 million to 115 million range in C4Q11; shipments (via inventory burn-down) in the about 125 million to 130 million range (up slightly from our prior estimate of about 120 million to 130 million)," he wrote in a research note Monday. "We estimate production/shipment levels to increase into the 140 million to 150 million range in C1Q12 and then see a return to normalized production levels into the C2Q12 timeframe."

Thor Olavsrud is a contributor to InternetNews.com, the news service of Internet.com, the network for technology professionals.

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