IDC: HDD production will fully recover soon, prices probably won't

By on April 4, 2012, 7:00 AM

Between Japan's earthquake and Thailand's flooding, hard drive makers had a rough 2011 with year-over-year shipments declining 4.5%, but the industry is well on its way to rebounding. IDC reports that the cleanup of manufacturing facilities should conclude in the first half of 2012 and assuming disaster doesn't strike again, production should return to preflood output levels in the latter half of this year.

The resurgence is expected to bring a boost in shipments of 7.7% on-year, with a compound annual growth rate (CAGR) of 9.6% for the five-year period between 2011 and 2016. The research outfit also expects 2012's hard drive revenue growth to exceed the year's shipment growth as manufacturers take the chance to jack up rates and reverse some of the "excessive price erosion" we've seen since 2009.

"In many respects, the hard disk drive industry has collectively hit the 'reset' button," said John Rydning, research VP, Hard Disk Drives at IDC. Rydning explained that hard drive prices will gradually decline "at a rate that still delivers value to customers," while letting manufacturers bank enough for developing new technologies that boost drive capacity, performance, reliability, power consumption and security.

Although increasing prices will help pad bottom lines in the short-term, Rydning noted that hard drive makers will still have to innovate and maintain a diverse portfolio to ensure long-term growth. This will include hybrid drives that combine disk storage with flash memory, such as Seagate's Momentus XT series. Such devices could generate a revenue $50 billion by 2016, assuming a five-year CAGR of 8.6%.

IDC believes HDD manufacturers must address the emergence of flash storage by convincing PC vendors that hybrid solutions are a better value. Additionally, the firm notes that the rising popularity of mobile devices such as smartphones and tablets is affecting PC sales and thus HDD sales. Instead of buying drives in new computers, people are increasingly interested in centralized networked storage.




User Comments: 14

Got something to say? Post a comment
sapo joe said:

I was to buy another 2tb HDD for my PC, but I gave up since the price rising. And probably will have to wait for one more year to get a fair price on it.

Probably for the best, I'll end up buying a Blu-Ray burner and use it to backup my files.

MrTomTom said:

I'm so lucky that my TB HDD failed 2 months after the floods.

H3llion H3llion, TechSpot Paladin, said:

Disgusting. Well I better hope that my RMA will work out, I am running out of space and will not buy another HDD till price drops back down.

Samsung SpinPoint F3 1TB £49 @ Kikatek.com. Looks like il be ordering soon.

Scshadow said:

Did these companies not have flood insurance? Well of course they did. Any excuse to overcharge is a good excuse.

Guest said:

Western Digital and Seagate are criminals; it is illegal to take part in price fixing. How could trade overseers sanction the merger of Hitachi and WD etc?

This is severe corruption.

I keenly feel apathy and disgust. The money grubbing corporations sicken me.

Guest said:

@Scshadow: I don't think such a thing exists. Ensuring companies famously never cover damage done by nature. Or else they would be bankrupt the moment a flood hits.

Unless I'm misinformed of course.

Guest said:

Back in 2008 we had record flooding in my area that was called a 500 year flood in most effected areas. There are several large industries located right on the river that flooded among them was the largest Quaker Oats manufacturing facility in the US. Like most of the other companies they were self insured and had already put away money into funds in case of natural disaster or other catastophe. Nearly all large businesses and corporations use similar plans, so they may not have had "flood insurance", but they definately had some type of money set aside if something like this happened. Also, to be noted is the fact that Quaker Oats was back up and running at full production within about 6 months and they even built a flood wall to prevent future issues. Needless to say even 4 years later the city itself still hasn't done much to get back on track in many effected areas.

Guest said:

Don't forget to mention resellers like Newegg who jacked their prices up 300% or more on product that was already sitting on their stock shelves.

MilwaukeeMike said:

Guest said:

Don't forget to mention resellers like Newegg who jacked their prices up 300% or more on product that was already sitting on their stock shelves.

Sale price is based on replacement cost. It's why gas prices change everyday, not when the station refills it's tanks. This is how all businesses work. Would you sell hard drives for less than it would cost you to buy new inventory?

MilwaukeeMike said:

Guest said:

@Scshadow: I don't think such a thing exists. Ensuring companies famously never cover damage done by nature. Or else they would be bankrupt the moment a flood hits.

Unless I'm misinformed of course.

Of course flood insurance exists. If you're a homeowner in the US you must specifically have it included in your policy, but it definitely exists.

And why do you think insurance would prevent an increase in prices? A decrease in supply with steady demand equals an increase in price. I'm not going to explain anymore econ 101 here, but this thread is full of ignorance. Corruption and price fixing because their plant was flooded? What?

mosu said:

Because companies like actual prices of hard disks and because people still pay the price asked.

Guest said:

Prices won't go down because the Hard drive Manufactures cornered the market and are now Monopolist. Bottom line plain and simple.

parasit3 said:

Remember when you could get TB hard drives for as low as $40? God, the floods ruined it.

Guest said:

its easy... you want the prices to drop, then stop buying.

Load all comments...

Add New Comment

TechSpot Members
Login or sign up for free,
it takes about 30 seconds.
You may also...
Get complete access to the TechSpot community. Join thousands of technology enthusiasts that contribute and share knowledge in our forum. Get a private inbox, upload your own photo gallery and more.