SIC 3572 Computer Storage Devices

Encyclopedia of American Industries | 2005 | Copyright

SIC 3572
COMPUTER STORAGE DEVICES

This classification covers establishments primarily engaged in manufacturing computer storage devices.

NAICS Code(s)

334112 (Computer Storage Device Manufacturing)

Industry Snapshot

The computer storage industry manufactures tape, magnetic, and optical storage and retrieval devices for computer systems. These products range from the common floppy and hard disk drives built into desktop computers to stand-alone storage management systems used in large enterprise networks.

Demand for storage capacity and performance has risen sharply, as microprocessors have grown faster, software applications have become more resource intensive, and network computing has become more pervasive. Attempts to harness processing power and offer users more features have made the typical new software application require vastly more storage space than earlier versions. On personal computers, storage needs have further evolved and multiplied because of expanding multimedia features and content, such as DVD movies and down-loadable music on the Internet. Meanwhile, corporate systems have had to cope with escalating storage and processing needs from internal users, as well as from the Internet.

Shipment values for computer storage devices and equipment, which totaled $9.0 billion in 2000, fell to $8.2 billion in 2001. At that time, some 66 companies competed in the domestic market. Despite the myriad forces stimulating demand for storage devices, the industry, like other computer hardware segments, has been hurt by fierce price competition. Such pressures have prompted significant consolidation within the industry and have brought cost cutting to the fore at several storage device companies. In addition to increased price competition, the market for storage devices was at the mercy of a weak economic climate in the early 2000s. This presented challenges across virtually every product segment in the computer industry, as manufacturers faced reduced spending and confidence levels in both the consumer and corporate sectors.

In the early 2000s, the industry continued to face both challenges and opportunities associated with storage outsourcing services, or so-called storage service providers (SSPs). Such Internet-based services offer storage space and management tools that clients can simply connect to and use, enabling companies to avoid purchasing and maintaining storage hardware and software themselves. In the early 2000s, the nascent SSP field was altering how storage devices are used and marketed. It also presented an opportunity for makers of storage equipment to branch into services. By 2001 telecommunication giants like WorldCom and AT&T were involved in this sector. Worldwide, IDC, a leader in technology intelligence and industry analysis, forecast spending on SSPs to increase from $153 million in 2000 to $10.7 billion in 2005, according to Computing Canada. This increase reflected a compound annual growth rate of 134 percent.

Organization and Structure

Most computer memory storage devices can be classified as either optical or magnetic. In addition to optical and magnetic storage, semiconductor memory chips that store data and programs in the form of digital impulses had gained recognition as a viable new technology by the early 1990s.

Magnetic Storage. Magnetic devices record information in the form of magnetized spots that represent a binary code—a series of digits represented by either 1 or 0. A magnetized head suspended slightly above the surface of a medium reads and writes information on the disk. To record information, electrical charges that register a pattern on the surface of the magnetically sensitive medium are delivered through the head. To read data, the same head detects and converts spots into electrical impulses. The data can be retained indefinitely, or erased and replaced with new magnetic spots.

The three primary classes of magnetic storage devices are hard disk drives, floppy disk drives, and magnetic tape machines. Magnetic tapes, which were once the most widely used method of computer memory storage, store data on 4-inch-wide or 8 millimeter tape coated with a magnetically sensitive compound. Tape units typically read and write at a rate of 183 to 722 kilobytes per second and can store more than 270 gigabytes. Some units, called autoloaders, combine several tape cartridges to maximize speed and capacity.

The advantage of magnetic tape storage is that massive quantities of information can be stored in a relatively compact space. Furthermore, tape devices have historically been the fastest method of reading and writing large amounts of data....

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