BeHardware
Floods and hard drives, where we're at
>> Storage >> Hard Disks

Written by Marc Prieur
Published on November 4, 2011

URL: http://www.behardware.com/news/lire/04-11-2011/#11926


Seagate has released some additional information on the impact of the floods in Thailand on the hard drive market. This natural disaster has also caused 420 deaths and counting.


Seagate says that while expected demand is likely to be in the order of 180 million units, only 110 to 120 million units are likely to be shipped. The company also says that manufacturers should be able to produce more drives for the first quarter of 2012 but that demand is likely to remain higher than production and will continue to result in higher pricing than normal. While Seagate says that the hard drive industry is likely to be affected for several quarters, we can expect things to get back to normal as of the second quarter 2012.

With respect to Seagate’s own production, it's factories were not affected themselves but capacity has been reduced because of problems sourcing hard drive parts. Seagate now expects to be able to ship between 41 and 45 million drives this quarter, which is at the lower end of its previous estimation of between 40 and 50 million (51 million last quarter). It’s expecting turnover of USD 2.6 to 2.7bn (USD 2.8bn last quarter) and a gross margin at the top of end of the 22% - 26% range (19.5% last quarter). Seagate says that its production capacity for the first quarter of 2012 will be 60 million drives, as long as the parts supply problems get sorted out by the end of December.

This higher gross margin is obviously due to price hikes linked to the shortage of drives, though manufacturer increases seem limited with the average price at USD 65.80 maximum, as against USD 54.90 last quarter. In comparison, prices in stores have tripled over the last few weeks, taking us back to the sort of price per GB we hadn’t seen since 2008!

There are many reasons for this difference, the first being that a good part of deliveries this quarter are going to OEMs at pricing that was negotiated before the price rises. Also, hard drive manufacturers naturally give preferential treatment to their big OEM customers over supply to wholesalers, which only exacerbates the difference between supply and demand and is causing the inflation we’re now seeing on the little amount of stock that remains. Finally, there's also the fact that the ‘grey market’, namely the surplus drives bought by OEMs and sold off at significant discount, isn’t as well supplied at the moment.

There is, of course, a knock-on effect further down the supply chain and laptop manufacturers in particular are starting to announce price increases little by little and even having problems with running out of stock.

So what’s to be done? With respect to additional hard drives, the wisest choice is obviously not to give in to the panic and simply to push back your purchases three to six months if possible, even if this means going through your drives and doing some housekeeping, a good habit that some of us have no doubt forgotten what with the ridiculously low prices in recent times. How can we complain about such an inconvenience in comparison to the cost to human life that the crisis has brought about on the other side of the planet?

Not all prices have yet gone up for desktops, laptops and so on and when they do, it will still be possible to make to with reduced storage capacity for a period, whether by retrieving a drive from an old machine or using an SSD instead while waiting for prices to come down for the acquisition of your secondary storage drive.


Copyright © 1997-2014 BeHardware. All rights reserved..