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Fujitsu enters small drive market with U.S. partner Cornice

Posted by iMark - 2006-01-15

The Japanese electronics giant Fujitsu Ltd. said it will produce 1.8-inch hard-disk drives for portable music players, video cameras and notebooks PCs.

To accelerate development, Fujitsu said it will collaborate with Cornice Inc. (Longmont, Colo.).

Fujitsu said Friday (Jan. 13) its hard-disk drive strategy calls for it to become the No. 3 supplier of disk drives on a value basis by the end of fiscal 2008 (March 2009). Fujitsu currently ranks fifth on a value basis and seventh in terms of volume, according to an internal survey.

Fujitsu said it will combine Cornice's 1-inch drive technology for consumer electronics with its own 2.5-inch technology to manufacture 1.8-inch drives. Most will be used in consumer devices such as audio players, and will include a CE-ATA interface.

Fujitsu will retain rights to manufacture and sell the 1.8-inch drives. The first product, which is scheduled to hit the market by September 2007, will be a 120-Gbyte model consisting of two platters. Fujitsu will also introduce perpendicular recording technology on the 1.8-inch drives.

The first model is likely being positioned to compete with rival Toshiba, which supplies small drives for Apple's IPod portable music player.

Fujitsu withdrew from the fiercely competitive and unprofitable 3.5-inch drive market for desktop PCs in 2002. Since then, Fujitsu has been focusing on 3.5-inch drives for servers and 2.5-inch drives for mobile PCs.

Fujitsu is the second-largest supplier of both types of drives after Hitachi Global Storage Technology, with a 24-percent market share. Seagate tops the 3.5-inch drive market, according to Ichiro Komura, president of Fujitsu Storage Products Unit.

"Players in the 3.5-inch market are decreasing, and the market won't grow larger," said Komura. Fujitsu expects that 1- and 0.85-inch drives will face harsh price competition from flash memories. "Thus, we put the priority on 1.8-inch drives," Komura said.

Earlier this month, Cornice signed a licensing deal with Hitachi covering each company's global patent portfolio. It secured $97 million in venture debt and equity financing in December.

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