Global hard-disk-drive (HDD) market revenue will decline by nearly 12% in 2013, according to information and analytics provider IHS’s IHS iSuppli Storage Space Market Brief. Total dollar estimates reveal an estimated $32.7 billion in revenue this year, down 11.8% from $37.1 billion in 2012. Furthermore, HDD revenue will stay flat in 2014, with estimates showing $32 billion (see the figure). The main antagonists fueling the downward trend are the tablets, smart phones and solid-state drives (SSDs) flooding into the market.

“The HDD industry will face myriad challenges in 2013,” says Fang Zhang, IHS storage system analyst. “Shipments for desktop PCs will slip this year, while notebook sales are under pressure as consumers continue to favor smart phones and tablets. The declining price of SSDs also will allow them to take away some share from conventional HDDs.”

HDD gross and operating margins will decline, too, due to sustained price erosion.

“However,” adds Zhang, “HDDs will continue to be the dominant form of storage this year, especially as demand for ultrabooks picks up and hard drives remain essential in business computing.”

Maintaining overall market dominance comes from HDDs’ cost advantage over SSDs, particularly in cases of higher densities and when calculating dollars per gigabyte. Both costs and pricing of HDDs run significantly lower than SSDs—HDD average selling prices are expected to decline another 7% this year.

In addition, HDDs will continue to be part of storage solutions, even in ultrabooks that use an SSD component, IHS says. The solution cobbles HDDs together with a so-called cache SSD module, creating a superior price-value proposition compared to SSD-only counterparts.

Significant growth for HDDs is expected in the business sector spanning the enterprise space, cloud storage, big data and big-data analytics. Because they’re the lowest-cost storage medium now on the market, HDDs will remain the final destination for filing digital content. To that end, Western Digital is expected to launch a 5-Tbyte Helium HDD in the last quarter of this year. It will cater mostly to data centers for enterprise servers and storage applications.

Western Digital and Seagate Technology will continue their battle for market leadership in terms of revenue and shipments, particularly in the enterprise business segment. Seagate owned a 50% share of the enterprise market in 2012, but Western Digital’s helium technology could push them past Seagate by the end of this year.

PC optical disk drives (for example, CDs, DVDs)—a parallel market to HDDs—also are expected to take a bit of a nosedive this year in both revenue and shipments. Reasons for the decline include smaller chassis sizes for PCs, a shift in preference among consumers toward video streaming instead of using physical disks, and cost-cutting measures from PC manufacturers that have lost interest in using optical drives.

Other challenges, such as those presented by thinner PC designs, is placing the overall optical disk-drive industry at a crossroads. Eventually, optical drives could in fact be completely abandoned by PC manufacturers.

For more information, go to www.ihs.com.