May 20, 2005 11:11 AM PDT

Hard-drive makers enjoy price bumps

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Hard-drive makers experienced a nice surprise in the first quarter when the average price of their products went up, thanks to the consumer electronics market.

Seagate Technology saw the average selling price of its drives rise to $79 in the first quarter, up $3 from the previous quarter, according to research company iSuppli.

Western Digital saw its average selling price rise to $60, an increase of $1. And Maxtor got a $4 nudge to achieve an average selling price of $75.

The bump came about in part because of demand for high-capacity drives in digital video recorders, set-top boxes and other consumer devices.

"These applications typically use drives with capacities ranging from 160GB to 500GB," iSuppli said in a research report. "The PC maker's density sweet spot is 80GB."

Demand for 1-inch diameter drives, which are incorporated in small music players and now cell phones, has helped, too.

A shortage of recording media also contributed to the price hikes.

The slight rise is something of a vindication for drive makers, who started to move into the electronics market a few years ago as a way to ameliorate the tough economics of the hard-drive industry.

Although the trend toward drives in consumer electronics devices will likely reduce some of the pressure on drive makers, making drives will remain a tough way to earn a living. The majority of drives still get consumed in the PC market, and many drive makers still regularly lose money.


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