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The Internet Winds Blow Strongly

April 29, 2013

I mentioned the other day that the changes in how people access the Internet are putting pressure on the keyboard business.  That’s not the only thing changing in technology, though.  Hard drives have been shifting to solid-state, and that’s affecting other business as well. (Standard disclaimer that I’m in tech, and I’m familiar with many of the players here.)

Revenues for LSI’s first fiscal 2013 quarter, ended March 31, were down to $569m. They were $600m in the previous quarter, a 5 per cent fall. A year ago revenues were up at the $622m mark, meaning revenue year-on-year has declined by 8.5 per cent.

The straight line showing the decline in LSI’s profits from Q1 2012 is there for all to see. So where’s the leak in LSI’s ship?

We think it’s primarily from the declining PC hard disk drive business to which it supplies various silicon product components (such as SoCs and pre-amps), with the server mark presenting additional difficulties.

I’d note that LSI has some pretty strong product plans coming up, so I think their strong leadership will make the right strategic moves.  I’m more interested in how fast the industry is changing, and the loss in HDD volume is impacting many companies.  It wasn’t that long ago that the industry was marveling at the disappearance of the floppy, Zip Drive, CD, and the like as secondary storage.  But, “Nobody can replace a hard drive.”

Well, we’re still driving a lot of internal storage, but it’s less and less apparent that the old system drive is the only way to go.  The rise of music players, phones, and other items with serious storage and no rotating media is not a shock, but the disappearance of the file system as a basic unit of operation could be on the way out.

It wasn’t long ago that the world was excited about the length and staying power of the PC.  I don’t see the PC going away, and in fact I believe it’s still strong.  I just wonder what we’ll be calling a PC in another decade?

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