Chicago (IL) - Seagate today expanded its smallest form-factor harddrive family with a 6 GByte model that is targeted at the compact music player market and allows the iPod mini and its competition to offer more storage capacity.

The times of music players being just a negligible market segment for harddrive manufacturers are long gone. Apple just announced to equip the iPod mini with a new 6 GByte - which is supplied by Seagate and soon will appear in a range of other music players.

Seagate, which is the world's largest independent harddrive manufacturer, has the majority of the competition on its customer list. The firm's ST1 drive so far was shipped in sizes of 2.5 and 5 GByte. Seagate said the new 6 GByte version has been shipping since January and it should not take too long until the devices appear in updated versions of compact portable audio players from Creative, Olympus, Rio, Sanyo, and Virgin. While the drive is also in the iPod mini, Seagate and Apple decline to talk about the integration of the drive.

According to Dave Reinsel, director of storage research at market research firm IDC, about 8.5 million 1" harddrives were shipped in 2004. The year before, the segment barely exceeded 100,000 units per quarter. The analyst expects the drives to be the storage medium of choice in consumer electronics with a capacity need of 4 GByte or more. Below that mark, Flash will evolve as the superior storage type for the foreseeable time.

Next to Seagate and Hitachi, other firms such as Western Digital are entering the 1" harddrive market and create a highly competitive market for all players. Given the market opportunity and growth, we would expect pricing of the drives to drop and capacities to increase faster in 2005 than in the past twelve months. Hitachi for example announced at CES that it will hit the 8 or 10 GByte mark later this year. Price drops are likely to be limited mainly to the retail market, where most manufacturers still have space to move down from the current $200-$250 price point for 5 GByte drives.

According to Reinsel, it's a different story for the OEM sector: With drives shipping for less than $100, margins are already tight. Prices of portable audio players therefore will not be dropping significantly anytime soon.

Related stories:
CES: Seagate set to ship 5 GByte CF harddrive for digital cameras