Technology News Reuters.com
Fri Jan 13, 2006. TOKYO (Reuters) - Japanese electronics maker Fujitsu Ltd. said on Friday it would start producing 1.8-inch hard disk drives used in portable music players and video cameras, entering a market dominated by Toshiba Corp..
Fujitsu's move is prompted by expectations that growth in hard disk drive demand will be driven by consumer electronics such as Apple Computer Inc.'s iPod and mobile PCs in the coming years.
Fujitsu, a chips-to-computers conglomerate, currently makes 3.5-inch drives used in servers and the 2.5-inch variety for notebook PCs.
"We are entering the consumer electronics arena and the market for smaller drives because that's where growth is," Fujitsu Corporate Senior Vice President Ichiro Komura told a news conference.
Fujitsu will be going head-to-head with Toshiba, which is the world's sixth-largest hard drive maker overall but leads in the 1.8-inch variety. Toshiba supplies small drives for Apple's iPod.
"Fujitsu's 2.5-inch drives fetch a premium over similar products from other suppliers because of their quality and dependability," Mizuho Investors Securities analyst Yuichi Ishida said.
"Now, armed with this strength, Fujitsu is entering the 1.8-inch market. I see a pretty good chance for them to succeed."
Following the announcement, shares of Fujitsu closed up 5.06 percent at 1,058 yen, outperforming the broader market, which was virtually flat. Toshiba ended the day unchanged at 800 yen.
DRIVE SALES
Fujitsu's Komura said that the launch of 1.8-inch drives will help Fujitsu boost sales of hard disk drives to 400 billion yen ($3.49 billion) by the year to March 2009, by when it aims to become one of the world's top three makers.
The company, which projects hard disk drive sales of 280 billion yen in the current business year to March, ranked fifth with 8.4 percent of the $22.9 billion market in 2004, according to research firm Gartner.
U.S.-based Seagate Technology took the top spot with about 27 percent, followed by Hitachi Global Storage Technologies -- a unit of Hitachi Ltd., Maxtor Corp. and Western Digital Corp..
Fujitsu aims for an operating profit of 20 billion yen at its hard disk drive operations in the year to March 2009, up from an estimated profit of six billion yen in the current business year to March.
The company will jointly develop 1.8-inch drives with U.S.-based Cornice Inc. for consumer electronics and aims to launch a 120-gigabyte model by April-September 2007.
The drives will be used in music players and video cameras, which are increasingly employing hard drives instead of conventional media to store moving images.
Fujitsu also plans to develop by itself another set of 1.8-inch drives for "ultra-portable" notebook PCs.
($1=114.47 Yen)
© Reuters 2006. All Rights Reserved.
