The HDD industry shipped 434.2 million units, compared with 375.8 million units in 2005, iSuppli said. In the fourth quarter of 2006, suppliers shipped 119.7 million HDDs, a 15.8% increase from the same period in 2005.
Among the challenges were price wars that followed Seagate Technology's acquisition of rival Maxtor, and shortages of glass media. In addition, demand for 1-inch HDDs slowed because manufacturers of MP3 players have been shifting from rotating drives to flash memory for music storage.
Last year also saw the rise of a potentially competitive technology to HDDs in PCs: Nand flash-based drives. The trend prompted small-sized HDD specialist Cornice to switch from selling HDDs to Nand-type flash memory products, iSuppli said. Interest in hybrid flash or rotating media HDDs has been stimulated by support of the emerging technology in Microsoft's Windows Vista, and the introduction of Intel's Robson, the code name for a platform technology that uses flash memory to increase system responsiveness, make multitasking faster, and extend battery life.
Along with strong sales to established markets in computing and consumer electronics products, the industry benefited from increasing sales of external hard drives, a relatively new market. Shipments of external HDDs soared 37% in 2006 to 2.6 million units. Demand for the devices is driven by an increasing number of consumers storing and backing up large video and audio files downloaded from the Internet.
"What's impressive is these strong sales for HDD manufacturers came at a time when the industry was facing multiple challenges," iSuppli analyst Krishna Chander said in a statement.
An emerging new application in 2007 for HDDs is the "terabyte home." The concept involves the use of ultra-high-capacity HDDs that can consolidate all consumer data storage needs into a single drive. Companies pursuing the market include Seagate, WDC, and Hitachi GST.
ISuppli predicts HDD shipments will rise by 17% over this year.
In the fourth quarter of this year, market leader Seagate increased its share a tad to 34.6% from 34.3% in the third quarter. WDC held its second-place position at 20.5%, up slightly from 19.9% in the previous quarter. No. 3 Hitachi GST's share, however, fell slightly to 17.2% from 17.5% in the third quarter.