The steep price freefall for hard disk drives (HDD) is over, but prices will still drop by about 4–6% in the fourth quarter.

In the first half of the year, HDD prices fell by about 20% per quarter for select equivalent-capacity notebook HDDs. Prices fell slightly more than $100 in December 2006 to about $65 in early June 2007, according to researcher iSuppli.

However, suppliers have now decided that cutting prices to maintain or grow market share isn't worth it and prices are stabilizing for many drives. HDD prices will still fall in the fourth quarter, but only by about 4–6%.

"Market share alone does not fill the coffers," says Krishna Chander, senior analyst for storage systems at iSuppli based in El Segundo, Calif. "Higher profits come from identifying and positioning product lines to address emerging trends, rather than battling it out over established commodities that have little differentiation."

HDD unit shipments are healthy because of strong demand for computers. Worldwide HDD shipments will increase by 15% in the third quarter and 11.3% in the fourth quarter.

Besides computers, set-top box/digital video recorder (DVR) systems were expected to generate strong HDD demand for the rest of the year. Sales in this segment are expected to rise to 22.7 million in the second half of the year, up 22% from 18.6 million in the first half.