Most people trust cloud for privacy already
Just look at banking, all your moneies in a cloud. Just a different cloud :) They don't have it as a large pot of gold in some mountain.... or under a rainbow.
But look at other services, like Gmail, how many people store the emails to all sorts of personal stuff in there? Extremly private pictures, or messages between loved ones or password/verification emails to all sorts of services.
To be honest, most people don't know what a HDD is.
And people store files on their computer and not on their hdd....
So why are sales going down?
Laptop vendors putting in SSD's, memory stick capacities are huge and low cost.
Many people now own a smart phone which can act as an external drive (16GB SDHC card in my android right now...).
So all these factors are of course going to change the HDD market.
And as somebody said, hdd proffits have gone down, no mention of actual volume...