HDD supply to recover by Q3 2012, prices to remain high

By on February 14, 2012, 3:00 PM

Echoing concerns from various hard drive manufacturers, market research firms IHS iSuppli and Coughlin Associates are predicting that HDD inventories will not be back to normal until the third quarter of this year and prices will likely remain inflated at least until 2014 as a result of last year's floods in Thailand.

Both firms agree that the recovery of global hard disk drive manufacturing has begun and will continue during each quarter of 2012. However, with demand still exceeding supply, inventories will continue to be depleted until production is back to pre-flood levels later this year. Shipments are set to decline by 13% in the first quarter of 2012 and by 5% in Q2 compared to 2011 but will return to annual growth in Q3.

Prices will remain high for a while longer due to a number of reasons, including the higher costs associated with the relocation of production, as well as higher component costs because of flooding impacts among component makers, according to iSuppli. Coughlin Associates (PDF) estimates the hard drive industry will have to spend about $1 billion to replace and repair manufacturing plants damaged by the flooding.

Additionally, the mergers between Seagate and Samsung as well as between Western Digital and Hitachi GST means there are fewer competitors in the market and less pressure to bring prices down.

Hard drive prices are estimated to remain about 20% to 30% higher over their average pre-flood prices through most of 2012. Of course, some drives appear to have been more severely impacted than others. For example, the Seagate Barracuda XT line is marked up by 60-140% at Newegg.com, as detailed in a recent article.

On a positive note, Coughlin believes the higher prices will help fund expensive new technology transitions by 2015 or 2016 and increase areal density growth rates.

Image source Vitaly Korovin / Shutterstock




User Comments: 23

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Guest said:

I will NOT buy a single hard drive before the prices at back to normal. The same goes for my family and friends.

Guest said:

I will also not buy a single drive before they go back to pre-flood prices. Then again I did buy a 2tb and 2-1tb drives a month or so before the flood.

SNGX1275 SNGX1275, TS Forces Special, said:

I too will not buy one until prices are reasonable again*. I really think they are being held high intentionally to drive up demand for SSDs.

*Unless I have a hdd failure.

willard27 said:

Same for me, I have extra ones I had bought before the floods and I know I can consolidate drives that are not being used efficiently.

Burty117 Burty117, TechSpot Chancellor, said:

Yeah I've just found a way to use my hard drives space efficiently, I want some faster ones (like most people on this planet) but I can wait until the price is reasonable again, just pray they don't fail

ikesmasher said:

If prices are inflated until 2014, its the companies being stupid, not because there is actually a shortage.

Guest said:

I won't buy a single HDD either until the prices drop back to before the flood. In fact thinking logically, the prices should drop down lower than what they were before the flood.

At the current prices, SSDs are far more alluring.

Guest said:

I won't be buying any hard drives either...I'll keep my hard earned money, thank you very much!

I do agree with SNGX1275, in that i'll buy a hard drive if I have a failure.

R3DP3NGUIN R3DP3NGUIN said:

Same here, would love to buy a nice 4TB but until prices drop, its the event of a HDD failure that will prompt me to buy.

Guest said:

I just don't get it... If you have the production to meet the demand, why keep the prices higher? If you keep the prices higher, you will not sell as many products. Myself, as well as a lot of other people refuse to buy drives at these inflated prices. So if you figure that into the situation, if the prices are higher, less drives are sold, which means less total income for the company. However if they lowered their prices back to pre-flood prices, more drives will be sold to the people who refuse to pay inflated prices. Not only will they sell more drives, they will gain back respect of old customers who have given up on them. The idea is to sell more drives at lower prices, not sell less drives at higher prices. If you make 50 dollars per drive sold, but only sell 10 of them a month for example, that's NOT as good as making 10 dollars per drive but selling 100 of them a month. If they want their money back to repay the damages, they should work with customers and support their products and get them moving quickly, not keep the prices inflated.

Scshadow said:

Don't companies like this have some kind of insurance to cover natural disasters? So they get payed by the insurance while we pay up extra as well? Just sounds like BS to me.

cliffordcooley cliffordcooley, TechSpot Paladin, said:

Don't companies like this have some kind of insurance to cover natural disasters? So they get payed by the insurance while we pay up extra as well? Just sounds like BS to me.
Thats the thing about insurance companies. They tend not to insure against disasters within their natural disaster zones. In other words you can't get flood damage insurance within a flood zone. I feel that defeats the purpose in getting insurance but thats the way things are.

That was the reason for the relocation, to relocate outside the flood zone. The relocation cost is partly the reason why the continued high cost.

Guest said:

I dont understand. Why don't you get it? It is clearly addressed in the article. You and others like you can refuse to buy at "inflated" prices at your own risk. Your data growth, in all liklihood will continue unabated. Then what? My suggestion is that users better start brushing up on de-duplication and other methods of managing data but I will tell you ahead of time it will be superfluous in stemming demand caused by growing data.

Guest said:

Just curious, but what = "reasonable". A simple understanding of supply and demand will explain what is happening. Not only has the HDD supply chain been disrupted. By most current accounts over 60% of the HDD parts supply was wiped out. Now lets take it a bit further. While all of this is going on Seagate closes on its acquisition of Samsung HDD assets. Western Digital is still marching towards a closing of its own acquisition of Hitachi GST. That will result in three vendors of hard disk drives versus five. What do you expect will happen with price? Or have I accidentally stumbled into a cadre of socialists?

nismo91 said:

in early 2011 i bought 1TB 3.5" drive just when the price is right for me. i didn't get the 2TB because i thought it was going to get cheaper, and the 1TB is not filled up yet. unexpectedly the flood appears and the same 1TB drive cost more than double now.

another excuse to use SSD for my rig, and a lesson for me to cleanup my disk and conserve some disk space. by the looks of my current amount of data, im not going to buy HDD again in the near future unless i experience disk failure.

Guest said:

Just last week I lost a drive on my system. The good news is I have RAID 1, so the system is still online and working fine, the bad news is it looks like I will have to purchase a new drive.

Guest said:

Just like every other company out there its just pure GREEDINESS.

Guest said:

I will not purchase another HDD until the prices are down too. I wonder how much money they would have saved if they put the manufacturing plant in a safe area in the US? 1 billion dollars gone. Makes me laugh a little bit.

mailpup mailpup said:

Well, I plan to hold off as long as I can while prices are up but I probably won't let it get in the way of building a new rig when the time comes (whenever that turns out to be). If need be, I have an unused WD black 640GB and two unused WD 250GB drives that I could use but I'll cross that bridge when I get to it.

Guest said:

I think it is a conspiracy: Elevate HDD prices to a level close to SSDs to encourage people into buying SSDs and thus drive SSD's prices down to become the mainstream and phase out all HDDs like CRT & LCD situation.

What happened to HDD plants in China & Singapore. My last 500GB x 2 drives that I bought was made in China.

Leeky Leeky said:

I'm holding off for now, but could do with a few more Samsung Spinpoint 2TB F4's at some point. If I needed them due to failures I wouldn't let it stop me though, just wouldn't go out of my way to get any while the prices remain high.

I do laugh when I get the weekly offers in the email from my usual purchasing stores though. Marking down hard disks and making a big deal of it when they're still charging 50% more than the previous retail price even with the huge discount added.

Next disks I get will be a couple SSD's to run in RAID0.

Guest said:

Insurance ? -oh ya sure, ...similar to AIG,..., umm Wall Street ? - ie: you can't get "money" insurance in a "money" insurance zone like Wall Street. I mean, that's what "Bush"wacker left americans with, isn't it? -No insurance.

Ha ha ha.

~> 120% price inceases ? -comon' ppl. :(

This is all nothing but illegal price-gouging, by ALL the HD Makers', and everyone knows it.

Guest said:

How many movies can you save on your 6-TeraByte ($100) drive that was supposed to be out by Hitachi in 2013 ?

Now, how many movies are you gonna save in your SSD. ? -ya, that's what I thought.

Strangely enough SSD's (made of sand - silica) should cost less than half of any Mechanical HD's.

mmm ?

Yep, they want keep an eye on us all, in the cloud$, and NOT saving whatever we want, locally, on our (not-so-big) Drives anymore.

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