Toward the end of last year the harddrive market took a real beating, as floods in Thailand completely paralyzed the industry. The worst is over, but there is still a lot of work to do, but the manufacturers are reluctant to lower prices to the levels they were before.
Harddrive prices skyrocketed over night and from record-low levels harddrives all of a sudden became the most expensive components in a computer. This was due to floods in Thailand that paralyzed Western Digital, while many other manufacturers were not as severely struck. The demand for harddrives was for 180 million units in Q4, and the shortage was estimated to 60 million, which forced companies to raise prices.
“In many respects, the hard disk drive industry has collectively hit the ‘reset’ button,” sa John Rydning, research vice president, Hard Disk Drives på IDC. “A reset of the HDD industry structure should allow for the remaining HDD industry participants to slowly reduce HDD prices from current levels at a rate that still delivers value to customers, while at the same time ensuring sufficient funding is available to develop new HDD technologies that are needed to improve HDD capacity, performance, reliability, power consumption, and security. Still, long-term revenue growth will only be realized if the remaining participants transform into storage device and storage solution suppliers with a broad range of products for a wide variety of markets.”
The situation is better today and the harddrive market is starting to recover, even if there is still a lot of work to do to get all fabs up and running again. We should not expect prices to drop down to the same level as before the flood. Before all of this the margins were razor thin and they are now taking the opportunity to make up for this.
Prices will slowly drop, but it will take a very long time before reach levels even close to those in early 2011. Seagate’s revenue went up since it was not affected to the same degree by the disaster, and could sell its harddrives at higher prices than before. The production is expected to reach the normal levels in the second half of 2012, but prices will take longer than that to recover.
Source: IDC via TechPowerUp
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