HDD reliability improves but AI demand is eating supply

Backblaze has published its 2025 hard drive reliability report, covering 344,196 drives across 30 models from WD, HGST, Toshiba and Seagate. The overall failure rate fell to 1.36% in 2025, down from 1.55% in 2024. These drives sit in cloud server environments and face 24/7 use rather than the lighter duty typical desktop HDDs receive.

Western Digital says most of its 2026 production has already been allocated to its "top seven customers," and three of those customers have also booked portions of 2027 and 2028 output. As a result, much of WD's capacity for the coming years appears to be earmarked for large AI server deployments.

Consumer hard drives now account for just 5% of WD's revenues, reflecting a broader shift toward SSDs in PCs and WD's smaller role in the SSD market. That business mix helps explain why OEM and hyperscale customers are prioritized for production.

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