Tuesday, March 5, 2019

Demand Is Far From Insatiable

Based on numbers that IDC conjures from thin air, pundits believe that demand for storage is insatiable because everyone says Lets Just Keep Everything Forever In The Cloud. That idea assumes storage is free, but Storage Will Be Much Less Free Than It Used To Be. (Both links are from 2012). Below the fold I look at some real-world numbers showing how much storage actual customers are buying.

Chris Mellor's Nearline disk drive demand dip dropkicks Seagate: How deep is the trough, how deep is the trough? is yet another tale of storage vendor woe:
Seagate was caught out by an unexpectedly deep drop in disk drive demand and saw its revenues fall 7 per cent. Along with the rest of the tech world, it talked about a recovery mid-year, and promised world+dog at least one more lousy quarter.

Reported revenues (PDF) for its second quarter of fiscal '19, ended 28 December, were $2.7bn, down 6.8 per cent on last year's $2.9bn. The company said cost cuts helped profits rise from $159m last year to $384m.
The company shipped 87.4EB of capacity, down from the 87.5EB shipped a year ago, and averaging out at 2.4TB/drive. The big fall was in nearline drive demand, as a Seagate chart shows. It expected a fall two quarters ago but not this deep.
Earlier, Mellor reported on Western Digital's even worse woes in Weak flash demand and disk sales leave Western Digital scrabbling to claw back $800m a year:
Western Digital is about to go into cost cutting mode to carve out $800m in savings, after reporting shrinking revenues of $4.23bn for its second fiscal 2019 quarter, down by a fifth compared to the year ago period.

Losses were almost halved from $823m to $487m for the three months ended 28 December 2018. Gross margin was 31.3 per cent and operating cash flow stood at $469m. It built 30.3 million disk drives in the quarter, compared to 42.3 million.

Western Digital now makes both flash and disk products: flash revenues came in at $2.2bn, down 18 per cent year-over-year and disk was down 23.5 per cent to $2.1b. Disk exabytes shipped in the quarter declined 17 per cent on the year.


William Wilson said...

Hi Dave,

I really enjoy your commentary and insights. Might I suggest you create a Twitter account and embed social media sharing options to extend your reach? I think you have valuable contributions to make towards the broader public debate on these topics.

I work at Library and Archives Canada in the policy and research section, and I regularly share your works.

Thanks, Will

David. said...

Sorry, William. My experience with "social media" in the Usenet era convinced me a long time ago that they inevitably end up as a toxic swamp. And now, given that their only business model is to violate their user's privacy, I won't enable them in any way, and neither should any of my readers. See, for example, some of the many, many reasons why you should not have anything to do with Facebook: Facebook's Catch-22.

David. said...

Daniel Robinson's Micron blames weaker DRAM and NAND Flash demand for Q2 revenue fall quotes Micron's CEO:

"NAND markets remain oversupplied, which Mehotra attributes to the acceleration in bit growth driven by the industry transition to 64-layer 3D NAND."

It seems like the "insatiable" demand for flash memory has been satiated, at least for now. Micron will:

"reduce NAND Flash wafer starts by five per cent, largely affecting legacy process nodes."