Hard drive prices to remain high through 2014
Inventories won't be back to normal until later this year
Computerworld - While hard disk drive (HDD) supplies are starting to resurge, inventories will not be back to normal until the third quarter of this year and prices will remain unusually high through 2014, according to market research firms IHS iSuppli and Coughlin Associates.
As a result of flooding in Thailand last year, HDD prices will likely increase 20% to 30% over their average pre-flood prices and remain there through most of 2012, Coughlin Associates said in its report today (download PDF).
Additionally, the hard drive manufacturing industry will have to spend about $1 billion to replace and repair manufacturing plants damaged by the monsoonal flooding.
HDD supplies in the fourth quarter of 2011 fell by 26% compared to the same period in 2010, according to IHS iSuppli. Shipments are set to decline by another 13% in the first quarter of 2012 and by 5% in the second quarter on an annual basis.
The average global selling price for HDDs soared by 28% in the fourth quarter of 2011, according to IHS iSuppli. While prices will decline by 3% in the first quarter and by 9% in the second quarter, they will remain inflated for the whole year.
"Prices will remain high for 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," said Fang Zhang, a storage analyst for IHS iSuppli.
PC prices will also be affected because system makers have signed annual contacts with HDD makers that have locked them into elevated pricing deals for the rest of the year, Zhang noted.
Additionally, industry HDD consolidation could hold prices higher than pre-flood levels for a few more quarters because there are fewer competitors in the market, IHS iSuppli said. It was referring to mergers between Seagate and Samsung and between Western Digital and Hitachi GST.
In a report released Friday, iSuppli predicted the Thailand flooding will continue to have an impact on inventory and prices until shipments rise first by 2% in the third quarter, followed by a 42% surge in the fourth quarter of 2012.
"The recovery of global HDD manufacturing has begun and will continue during each quarter of 2012," Zhang said. "HDD prices will remain inflated and inventories will continue to be depleted, showing that demand is exceeding supply. Supply and demand should return to balance by the end of the third quarter."
Coughlin Associates said the combination of industry consolidation and Thailand-related shortages, will result in higher HDD prices at least until 2014. The higher prices, however, will help fund expensive new technology transitions by 2015 or 2016 and increase areal density growth rates by 40%.
- Data Warehouse Augmentation: The Queryable Data Store While organizations have, to date, been busy exploring and experimenting, they are now beginning to focus on using big data technologies to solve...
- Rebranded Quadmark revamps its IT solutions with Google Apps Switching to Google Apps halved Quadmark's IT admin costs while achieving 10% time savings per employee. The global consulting firm now spends 80%...
- CrashPlan PROe Security Because mobile laptops often are connected to unsecured networks, a very high standard of security is required to ensure privacy.
- Protecting Digitalized Assets in Healthcare Healthcare providers face an urgent, internal battle every day: security and compliance versus productivity and service. For most healthcare organizations, the fight is...
- Live Webcast LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users?
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users?
- Make or Break: New Auto Products Must Go To Market On Time This Webcast quantifies the value of time to market for the auto industry and highlights how Primavera Enterprise Portfolio Management can help organizations. All Data Storage White Papers | Webcasts