Is there a future for hard disk drives in portable players?

Implications: * Reports from iSuppli are that the 1.8-inch hard drive equipped iPod Classic contains $190 worth of components. The product sells for $349 leaving significant margin over the costs of production. * Estimates of sales of iPod Classic are 3.1 million units in 2007 compared to 26 million iPod Nanos and Touches. * Apple has made fewer changes in the iPod Classic than it did in the new generation of Nanos and Touches. * Apple offers 8 and 16 GB Nanos compared to 80 and 160 GB iPod Classics.  Clearly they are breaking the market up into a higher and lower capacity niches.

Analysis: Hard disk drives used in mobile players are a much smaller part of the market compared to NAND flash memory. During the heyday of the Apple iPod Micro, small form factor (in that case 1-inch) hard disk drives were a major player in the mobile player market. The change in storage device demographics occured because of  a combination of lower flash memory prices combined with sufficient content storage capability for the current popular MP3 music format. MP3 music is often highly compressed, requiring as little as 10% of the storage capacity of the original content. This facilitates downloading on the internet and also reduces the total required storage capacity.

Flash memory capacity has reached a bit less than $10 per GB on the market making an 8 or even 16 GB media player within the buying range of a lot of consumers. Flash memory is not an electromechanical device like a hard disk drive and so a smaller consumer device can be built using flash memory. In particular the thickness of the player can be less with flash memory than with a hard disk drive. As a consequence of the price decline in flash very mobile consumer products are possible.   

For music and shorter videos these flash based products have proved to be very popular. On the other hand for less compressed (and higher audio quality) music the storage requirements per song can be many times larger than MP3. Also for longer videos the storage capacity can be much larger. For consumers that wish to carry with them libraries of richer audio or video content 8 or 16 GB may not be enough.

For consumers wishing richer content a hard disk drive based mobile player offers them the storage capacity that they need. It is these consumers that wish to carry higher quality libraries of content that are driving the hard disk drive mobile player market. If these storage demands remain static eventually flash memory will take over these markets as well.

What may sustain the mobile hard disk drive market is a continued demand for higher resolution content. There are developing technologies for mobile products that could enable the use of even higher resolution content (such as a mobile projector technology) that would only be cost effective with hard disk drives for the near future.  In the long run there may be other mobile applications that could create the need for more than a terabyte of storage capacity that consumers could carry with them.

Thus it is my opinion that flash memory will remain the most used storage product in mobile players but there will continue to be a market for products that require higher storage capacity. This developing market will probably sustain the use of hard disk drives in a niche player market for some time to come. For hard drive makers this is important because the history of the industry has moved consistently to smaller form factors over time.