Sunday, 19 May 2013
HDD prices to remain high till 2014
By Lucas Mearian | Jun 12, 2012
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PrintHard drive prices will remain high after massive monsoonal flooding last year knocked out manufacturing plants, and prices will not fall to pre-flood levels until 2014, a report released Wednesday stated.
In the wake of the flooding in Thailand last year, hard drive prices rose to an average of $66 in the fourth quarter of 2011, a 28% leap from the $51 average price in the previous quarter, according to IHS iSuppli.
The average price held steady at $66 in the first quarter of 2012 and is expected to decline only marginally, to about $65, in the second quarter, IHS iSuppli stated.
An "oligarchy" of two drive manufacturers created by industry mergers is one reason why prices continue to remain steady, according to the market research firm.
Additionally, PC makers in the second quarter signed long-term agreements with hard-drive makers, locking in prices that were about 20% higher than pre-flood levels, IHS iSuppli stated.
Demand-related issues also will contribute to inflated HDD pricing throughout 2012 and 2013. From local drives for media content, to cloud storage of social media and corporate data, the demand for large quantities of HDD capacity continues to increase.
Meanwhile, PC sales are projected to climb in 2012. Growth will be driven by the rising adoption of Intel Corp.'s Ivy Bridge microprocessor, the surging sales of ultrabooks in the second half of the year and the proliferation of Microsoft Corp.'s new Windows 8 operating system, iSuppli said.
"Even if all the [PC manufacturers] stop entering into [long-term agreements] by the end of 2012, it would take about four quarters with a 6% sequential decline in the [hard drive average sales price] to reach the pre-flood pricing level," the report stated. The likelihood of that is remote, it added.
The Thailand flooding that took place last fall caused a 29% plunge in shipments in the fourth quarter of 2012, IHS iSuppli has said. Production is rising and will recover completely by the third quarter of this year.
