Hitachi Global Storage Technologies (HGST), owned by Western Digital Corporation (NASDAQ:WDC), started shipping its 6 terabyte (TB) Helium-filled storage drive, Ultrastar He6, earlier this month. According to HGST, the Helium drive consumes less power than both regular hard disk drives (HDDs) and solid state drives (SSDs), while requiring lower physical space. Enterprises with large data storage could see this as a viable option because these drives provide high efficiency storage while reducing the overall cost of ownership.
The combined storage units shipped for PCs, laptops, smartphones, tablets, TVs, DVRs and enterprises was around 550 million units in 2012. According to an IHS iSuppli estimate, the number of Helium drive units shipped could reach around 100 million units in 2016.  The helium-filled drive could become a key driver for storage industry sales, especially in the enterprise segment, even if its sales don’t reach this optimistic estimate.
We have a $72 price estimate for Western Digital, which is slightly below the current market price.
What Are Helium-filled Disk Drives?
Hard disk drives have spinning disks inside them that rotate at very high speeds (~5000RPM) during the course of their usage. The air inside the disks creates turbulence, causing a lot of heat to be generated. These new drives are sealed with helium in them instead of air. Helium, being seven times lighter than air, doesn’t cause as much turbulence. This allows the rotating discs to go up to 10,000 RPM without overheating. The Ultrastar He6 can, therefore, provide high input-output per second (IOPS) without losing efficiency, which is generally caused due to overheating.
With considerably reduced turbulence inside the drive, the rotating disks can be packed closer by up to 50%, giving these storage drives a higher storage capacity than a regular disk drive of the same size. HGST built the Ultrastar He6 on the regular 3.5-inch form factor but with a storage capacity of 6TB compared to the standard capacity of 4TB to highlight this space effectiveness. Hitachi’s press release indicates that Helium drives can be submersed in water because they are sealed to trap Helium inside. This reduces the cooling costs even further since big data centers can simply use water for cooling the storage drives without having to use expensive cooling techniques.
Helium Drive Market Size
Solid State Drives, unlike regular HDDs or Helium-filled drives, have no moving mechanical parts since they are made up of integrated circuit (IC) assemblies. The use of electronic interfaces instead of mechanical components ensures less latency, low access time in reading or writing data and more resistance to physical shock compared to traditional drives. However, SSDs are much more expensive than traditional HDDs. Prices of HDDs have fallen considerably over the last few years and continue to do so, especially due to declining PC sales (Enterprise Market Lends Support To Seagate Amid Declining PC Sales). The average price of HDDs is around 5 cents per gigabyte (NYSE:GB) and is on a decline. Comparatively, SSD prices, after an initial decline, have stabilized to around 70-80 cents per GB over the last few months.
WDC hasn’t revealed the pricing of Helium drives yet, but we expect them to be cheaper than SSD, potentially in the 40-50 cents per GB range. In addition, the industry average capacity per unit shipped is ~800 GB. Since the average capacity per unit for enterprise storage is usually higher than that of the overall industry, we assume an average capacity per unit of 1,000 GB for the former. As already mentioned, the total units shipped could touch 100 million by 2016, but we’ll assume a conservative figure of 50 million.
Based on these assumptions, the total Helium drive market could touch $20 billion by 2016 (i.e. 40 cents multiplied by 1,000 GB multiplied by 50 million units). Since Western Digital has a first mover advantage, it could grab a significant portion of the market.
Enterprise Market Targeted
The Helium-filled drive will appeal to enterprise clients since it specifically addresses their concerns such as cooling costs, power consumption for data storage and storage density. Major companies like HP (NYSE:HPQ), Netflix (NASDAQ:NFLX), Huawei Unified Storage, Cerner (NASDAQ:CERN), Green Revolution Cooling and Code42 have been working with HGST, testing the product in its nascent stages. 
- Helium Drive Could Lift WDC Above Competition In Enterprise Market
- HGST Ships 6TB Ultrastar He6 Press Release
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