Hitachi can read the digital writing on the wall. Small hard disk drives have nowhere to go but down, soon to be made obsolete by NAND flash memory. They're phasing out their small drive business and focusing on making their bigger 2.5" and 3.5" drives.
Large-sized hard disk drives used in PCs and servers hold a cost advantage over NAND flash chips, but profitability was hit hard in the market for 1.0- and 1.8-inch drives as storage capacity has increased and prices have come down for NAND chips.
Hitachi's loss-making hard disk drive unit, which competes with larger rivals Seagate Technology and Western Digital Corp, shipped about 560,000 units of 1.8-inch drives in July-September, or 2.3 percent of its total hard drive shipments.
Hitachi shipped only 3,000 units of 1.0-inch drives in the three-month period.
Hitachi, which bought the hard drive unit from IBM for $2 billion in 2002, is in talks with U.S. private equity firm Silver Lake about the possibility of selling a stake in the division, sources familiar with the situation said in December.
2 billion five years ago. Ouch. Hitachi's competitor Fujitsu had big plans to offer a 120GB 1.8" drive by last year. They've abandoned that format as well. The only question for these manufacturers is: how long until no storage devices have moving parts?