Tablets Surge Means Hard Times Ahead for Hard Drive Makers

"Tablets like Apple's iPad represent a major threat to HDD demand," said Fang Zhang, an analyst at iSuppli. "As tablet adoption gains momentum, netbooks will suffer even greater declines."

Research firm iSuppli found that hard-drive shipments dipped 3.9 percent to 161 million units in the January-March period, down from 168 million a quarter ago. And business is expected to get worse.

As hard-drive-driven netbooks, which aren't quite as quick or light as tablets, fall out of favor, consumers are rushing to buy the latest iPad and iPad-challengers. Tablet sales in the U.S. are expected to surge to 24.1 million units in 2011, up from 10.3 million last year, and surpassing 82 million by 2015. That means those hard drives sales, which are partly tied to slumping PC and netbook sales, aren't likely to recover anytime soon.

Laptop sales are expected to slow in 2011 as well, to 387.8 million units, or a 10.5 percent growth, down from 15.9 percent growth a year earlier. In fact, tablets are even putting a strain on touch screen makers, leading to shortages in display panels.

But the tablet isn't exactly a hard-drive killer. Analysts say the devices are complimentary products to PCs, rather than replacements. But the intense consumer demand for tablets have delayed the need to replace home computers, creating longer upgrade cycles that further depresses hard drive sales.

In addition, with flash memory chips getting continuously larger and cheaper, those hard drives, which are comparatively slower, more mechanically complex and relatively less reliable, may one day become obsolete.

For now, their price-to-capacity ratio is more cost-effective than flash, ensuring they'll be spinning a while longer.

Last Christmas, netbook sales collapsed by 38 percent from a year earlier, causing at least one prominent netbook maker, Acer, to shift to tablets.