Hitachi Gears up for ''Era of Digital Video,'' Emphasizes Dramatic Growth Plan in 3.5-inch Hard Drives; Hitachi Engages 5-Year Plan to Double 3.5-inch Share; New CinemaStar Hard Drive Targets Digital Video Recorders

Business Wire, April 4, 2006

SAN JOSE, Calif. -- Hitachi Global Storage Technologies (Hitachi) today declares 2006 the "Era of Digital Video" as the company bolsters its support for this next "killer application" for consumer electronic hard disk drives. According to industry analyst firm TrendFOCUS, digital video will be the primary catalyst for the growth of hard-disk-based storage in consumer electronics, with the predominant shift occurring in 2006. TrendFOCUS projects that video-based CE devices requiring hard drives will grow 80 percent this year.

Hitachi is unveiling a tri-fold strategy -- code-named "Project Silver Screen" -- to accelerate the growth of digital video streaming, editing, recording and storage in consumer devices. Project Silver Screen brings together the following elements:

--Introduction of new 3.5-inch "CinemaStar" brand for DVR/set-top box customers;

--Infusion of new video stream management and low power features into hard drives;

--Increased manufacturing in 1.8-inch, 2.5-inch and, especially, 3.5-inch where the demand for high-capacity video storage is expected to be most prominent.

"The stimulus for hard disk drives in CE devices this year is definitely digital video, which is a natural progression following digital photography and music," said John Donovan, vice president, TrendFOCUS. "The need for greater capacity to support video will far exceed what we've seen in other media-rich applications, and it can only be satisfied with high-capacity hard drives in the hundreds-of-gigabyte and even multiple-terabyte range."

On a related front, the thrust to bring more 3.5-inch drives to market for digital video applications is part of Hitachi's broader effort to diversify and increase its participation in the 3.5-inch form factor overall. Now, in the third year of a five-year plan, Hitachi aims to significantly grow output in an attempt to double its 3.5-inch share by the end 2008. This will be spurred by a variety of factors:

--Diversification and expansion of product portfolio, spanning desktop, CE and nearline applications;

--Manufacturing expansion in China and Thailand;

--Broadening of 3.5-inch strategy to become hyper-growth engine for company overall.

"Having a strong position in the 3.5-inch form factor is essential to growing our relative position within the hard drive industry," said Bill Healy, senior vice president, corporate strategy and marketing, Hitachi Global Storage Technologies. "This is a strategic initiative for the future of Hitachi GST -- one that brings together our traditional leadership in 3.5-inch performance and capacity to now include manufacturing strength."

Era of Digital Video

Hitachi plans to be a significant force in advancing the use of hard drives in video-based consumer devices as it has in propelling the use of hard drives in digital still/video cameras and high-capacity MP3 players.

Hitachi believes video applications will proliferate across all hard drive form factors:

--1" -- smart phones with video download and viewing capabilities

--1.8" -- video-based MP3, digital camcorders, personal media players, navigation devices

--2.5" -- automotive entertainment, console gaming

--3.5" -- DVRs, video surveillance, standard and high-definition TVs, PC gaming

--Enterprise -- streaming video/video-on-demand systems/uncompressed video editing

Video-specific features that Hitachi plans to incorporate in CE hard drives include advanced streaming technologies, security, improved acoustics, low-power modes and adaptive error recovery, among others.

Hard drive analyst firm, TrendFOCUS, sees a healthy outlook for digital video in 2006, predicting the following trends:

--Explosive growth in high-capacity digital video recorders and DVD/HDD combo devices

--Shift to multi-function MP3 players supporting download, storage and viewing of music videos, TV shows, movies

--Increase in video hosting and downloading drives growth in enterprise applications for video streaming

3.5-inch Expansion

To double its 3.5-inch share by the end 2008, Hitachi will increase both its product breadth and depth. In addition to increased manufacturing in Hitachi's new Shenzhen, China facility, announced earlier this year, a new portfolio of 3.5-inch products delineated by application segment will help to steer customers toward the right product for their needs:

--Deskstar -- mainstream PCs, workstations and entry server applications

--CinemaStar -- digital video recorders

--New product and branding for nearline storage applications

In line with market demand, Hitachi also plans to increase 3.5-inch manufacturing at its Thailand facility. The combination of these activities will serve to help Hitachi achieve its 2008 growth objective. In fact, Hitachi is already well on its way to meeting that goal with a 45-percent year-over-year increase in unit shipment at the end of 2005 and a two-point share gain over 2004, according to IDC. In addition, Hitachi plans to expand its small-form-factor manufacturing to address additional demand for 1-inch, 1.8-inch and 2.5-inch hard drives for use in digital video applications.