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Thursday February 1 7:50 PM ET IBM Unveils Fastest Server Hard Disk Drive

By Nicole Volpe

NEW YORK (Reuters) - International Business Machines Corp. (NYSE:IBM - news) on Thursday unveiled the fastest hard disk drive for use in powerful business computers known as servers, signaling a recovery in the business for the world's largest computer maker after a year of production problems.

IBM's new server hard disk drive, the Ultrastar 36Z15, matches the 15,000 revolutions per minute speed of the one already made by market leader Seagate Technology Inc. (NYSE:SEG - news)

But, based on the speed with which the drive moves to retrieve a requested file, known as seek time, IBM's is the fastest hard disk drive now on the market, analysts said, surpassing the speed of Seagate's drive.

``IBM's would be the fastest disk drive out there,'' said Jim Porter, an analyst at Disk-Trend. ``Seagate did the first move to 15,000. IBM is definitely rivaling Seagate on server drives.''

Seagate spokesman Woody Monroy said that: ``IBM is a year late,'' and that Seagate would soon offer a product that would surpass the performance of IBM's offering.

``By the time that IBM actually steps into the ring and starts shipping these drives, we'll have introduced our next-generation product, and we'll be back on top in terms of the specs they've quoted,'' he said.

Armonk, N.Y.-based IBM is shipping the new drive in this quarter. Monroy said Seagate would introduce its next product during that time frame, but gave no further details.

Seagate had a 44 percent share of the market for server drives, while IBM had about 25 percent in 2000, according to market research firm International Data Corp.

Ibm Suffered Delay In 2000

IBM had about a 35 percent market share in 1999, before having to delay the release of 10,000 RPM drives last year.

The computer maker's hard disk drive business showed sales declines in the first three quarters of the year, and was cited by executives as a drag on overall results.

Large quantity shipping did not start until the third quarter, and the business returned to revenue growth in the fourth quarter.

Analysts said the IBM hard drive troubles may be getting worked out just in time for a projected pickup in demand for server hard drives after flat growth last year.

For 2000, server hard disk drives were a $22 million market, about flat with the 1999 total of $21.9 million, according to IDC.

``It was sort of a Year 2000 hangover,'' said Dave Reinsel, analyst with IDC, referring to the slowdown in computer system buying after corporations spent heavily the year before to make their systems ready for the Year 2000 changeover. ``There an increased build in 1999, and a slowdown in 2000.''

He added that in 2001, server hard disk drives are forecast to have growth in the 15 percent to 17 percent range.

Bill Healy, vice president of IBM's storage technology division, said that he has seen indications of strong demand for the new IBM product.

``We are seeing very strong demand from our key OEM customers,'' referring to original equipment manufacturers, or computer vendors for which IBM makes the drives. ``We've sent samples out to larger customers, who are qualifying the drives.''

Other players in the hard disk drive market dominated by Seagate and IBM include Fujitsu Ltd. (6702.T), Quantum Corp-HDD (NYSE:HDD - news) and Hitachi Ltd. (6501.T).

-- Rachel Gibson (rgibson@hotmail.com), February 01, 2001