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Hard drive prices to remain above pre-flood levels until 2014

by Mark Tyson on 7 June 2012, 12:45

Tags: Seagate (NASDAQ:STX), WD (NYSE:WDC)

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Hard drive prices are going to remain high for another two years according to market research company IHS iSuppli. After the flooding in Thailand last year, hitting many hard drive manufacturing plants and causing a demand/supply imbalance, prices of hard drives leapt 28 per cent. Production levels are expected to reach pre-flood levels by Q3 2012.

Average selling prices (ASPs) remained at $66 for Q1 2012, the same figure as in Q4 2011. In Q2 2012 the ASP figure is estimated to be $65. Before the floods in Thailand the ASP was $51. The floods caused a 29 per cent drop in production and a closely corresponding 28 per cent price increase.

Production levels are increasing, however so is demand for the drives, which is a big factor slowing any price reductions to pre-flood levels. IHS iSuppli also cite vendor lock-in as a reason that prices are moving down slowly. “Owing to concerns over HDD availability, an increasing number of PC original equipment manufacturers (OEMs) in the second quarter have signed long-term agreements (LTAs) with HDD makers.” says the report. Computer manufacturers have to plan ahead so reliability of supply is paramount.

One more factor in firmness of the prices is that there are now fewer competitors in the HDD manufacturing business. IHS iSuppli storage systems analyst Fang Zhang said the suppliers act like an oligarchy. He said “With the two mega-mergers between Seagate/Samsung and Western Digital/Hitachi GST, the two top suppliers held 85 per cent of HDD market share in the first quarter 2012. This was up from 62 percent in the third quarter of 2011, before the mergers. The concentration of market share has resulted in an oligarchy where the top players can control pricing and are able to keep ASPs at a relatively high level.”

Increased storage capacity is in constant demand by consumers and corporations. Cloud storage, HD video and new games use a lot of storage resources, among many other storage demands. A lot of new computer systems are being launched due to updates in Intel hardware and the upcoming Windows 8 OS. HDD shipments are expected to reach 176 million units in Q3 2012, the first time in a year that shipments have been more than 173 million. The price of SSD devices is coming down but the technology isn’t currently delivering the ratio of price to capacity acceptable to mainstream desktop and laptop computer buyers for use as their main storage drive.



HEXUS Forums :: 15 Comments

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What? Got to wait till 2014 for the price to come down... Hmmm... Am hoping SSD will be cheaper by then...
"prices of hard drives leapt 28 per cent"

28%? I was lucky enough in timing to buy two Barracuda Green 2TBs before the disaster (just over £50 each). They *doubled* in price (about £100 for just one, as far as I recall). Even now, after some price easing, they're still way above pre-flood levels (£80), about 55-60% up.

That reported 28% average must hide a lot of variation, with an awful lot of "cheap" drives pulling the average down. Tell us what they are! ;-)
This is getting ridiculous now! Western Digital are not dealing with this as well as Seagate, Seagate are starting t get reliability back and they have MUCH better prices. On Scan I see Seagate prices going down every now and again but WD prices are frozen
CommissarTommy
This is getting ridiculous now! Western Digital are not dealing with this as well as Seagate, Seagate are starting t get reliability back and they have MUCH better prices. On Scan I see Seagate prices going down every now and again but WD prices are frozen


WD's have mostly always been a bit higher price (agree though there is quite a jump in some configs atm), they also lost much more in the flooding which they might be trying to claw back a little on every drive sold to cover cleanup costs etc.., seagate can afford to lower prices more due to there shocking 1year warranty on mainstream drives as it means less inventory to store for warranties etc.. WD's mainstream is 2yrs
what a bugger. i was looking for 3tb drives to hit near the £50 mark and 4tb drives to hit the £100 mark