Hard Drive Prices Rise Due To Thai Floods

Some vendors also trim warranties; IDC expects shortages to persist into 2013.

Natural disasters around the world affect all parts of American business, and, of late the hard disk drive industry has been impacted. Flooding in Thailand, where one-third of the worlds hard drives are produced, has had a domino effect on shipments of hard disk drives.
Almost all major storage vendors have raised the prices on their arrays and disk drives, citing the devastating floods as the source of their hard drive supply woes.
Seagate
revised its financial outlook
in November, saying: The company continues to believe that, due to the industry impacts caused by the extensive flooding in Thailand, hard disk drive supply will be significantly constrained for several quarters. For the December 2011 quarter, the company believes the industry will ship between 110-120 million units.
[ Solid state drives look to benefit from HDD declines. See
Hard Drives Get Squeezed
. ]
Seagate said that the manufacture and shipment of hard drives will improve slowly through 2012. IDC expects that supply shortages will affect customers into 2013.
EMC issued a letter to its Velocity Sales Partner
Avnet Technology Solutions
that: The tragic, persistent flooding in Thailand has impacted the cost of hard disk drives in the global marketplace. Q1 2012 HDD list prices will rise between 5% to 15% over Q4 2011 levels. This increase will apply to HDD list prices across all EMC business lines.
NetApp followed the EMC announcement with a note on its website of a similar tenor: Effective February 6, 2012, we will be temporarily increasing HDD list prices 5-15% over current pricing.
Hitachi Data Systems followed in note: As with other companies in our industry, HDS has witnessed a global cost increase from hard disk drive (HDD) manufacturers due to the devastating floods in Thailand. To date, Hitachi has absorbed these price increases; however, on February 1, 2012, we will have to raise the list prices of the HDDs we sell by 5-15% to offset the cost increases being passed to us from our suppliers. We expect the increases to be temporary until the industry returns to a more stable production level.
A Dell spokesperson said, Over the past two months, Dell has made strategic purchases of inventory and pulled in supply. Any increased pricing for specific drives would be aligned with specific cost increases.
Finally, an HP spokesman issued the following statement: Given the uncertainty associated with the situation, HP expects there to be continued headwinds related to the flooding in Thailand, affecting hard disk drive supply and pricing by our suppliers, which may have a temporary impact on HPs pricing of HDDs. HP is in constant communication with our employees, clients, and suppliers to optimize business continuity and actively manage this dynamic situation.
IBM has not commented on increased drive costs.
Every vendor acknowledges that the price hikes will be temporary.
Seagate and Western Digital responded to the flooding, not by increasing the cost of their own hard drives, but by shortening the warranty period that protects the drives. Seagate is changing its warranty policy from five years to either three, two, or one years, depending on the drive type.
Western Digital is dropping its warranty period for its Blue drives to two years, while maintaining the same five-year warranty for its Black drives.
While it is hard to view an upside of all this turmoil, there is one. Solid state drive (SSD) sales are expected to increase in spite of the constrained supply chain caused by last years Japan tsunami. A continued uptick in SSD sales can hardly compensate for the shortage of HDDs, but it may boost their acceptance into enterprise-size businesses.
IDC predicts that storage manufacturers such as IBM and NetApp will look to the SSD vendors to backfill hard drive supply gaps. SSD manufacturers LSI, Marvell Technology Group, Micron Technology, and SanDisk have all issued statements on their views of increased business.
Deni Connor is founding analyst for Storage Strategies NOW, an industry analyst firm that focuses on storage, virtualization, and servers.
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Hard Drive Prices Rise Due To Thai Floods