Features - Storage Innovations:

HITACHI GLOBAL STORAGE UNVEILS TINY MICRODRIVE

Newly formed hard disk drive company Hitachi Global Storage Technologies has unveiled plans for a tiny drive that will be used in consumer electronic devices and said it will turn a profit in 2004.

International Business Machines Corp recently sold its hard disk drive business to Japan's Hitachi Ltd, forming the new company. But the computer maker still owns a 30 percent stake.

Chief Operating Officer Doug Grose, formerly with IBM, said in an interview with Reuters that while the company is still working on its business plans for 2003, 2004 and 2005, it will turn a profit starting next year.

"We will start making money and we believe that it will be in the 2004 timeframe," he said.

While IBM's hard disk drive business lost money for years, Grose said that the new company will be profitable because of its focus. IBM sells everything from computer services to software and hardware.

"Being solely focused on hard disk drives will allow us to really home in on a business model that will allow us to participate in this industry that is very competitive," Grose said.

Hitachi Global Storage said it plans to sell next fall a 1-inch microdrive that has 4 gigabytes, or 4 billion bytes, of storage space. That compares to the current top of the line microdrive with 1 gigabyte of storage that IBM had made.

Microdrives are used in portable electronics, like digital cameras, MP3 players and personal digital assistants. The company said that both Hewlett-Packard Co and Eastman Kodak are considering using the drive.

While it will still sell hard disk drives for use in network server computers and personal computers, Grose said the company is looking at consumer market for growth.

"It's clearly where the growth is," Grose said. "It's not necessarily where the highest margins will be... In consumer devices, you have to be very price competitive but it is the growth area of the market."