HDD Prices Not Predicted to Return to Normal Until 2014
June 11, 2012 9:09 AM
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prices will remain high until 2014 thanks to long-term agreements between computer makers and hard drive makers
flooding in Thailand
last year significantly affected the ability of several manufacturers to produce hard drives used for data storage in computers and other devices. The flooding meant that much of the production capacity was unavailable and led to shortages and increased prices for available hard drives.
According to iSuppli, the price of hard drives isn't expected to return to pre-flood levels until at least 2014. That means for more than a year, prices will be inflated due to shortages caused by the flooding. ISuppli reports that the average selling price for the entire hard drive market grew to $66 in Q4 2011, which is up 28% from $51 in the third quarter. The average selling price held steady at $66 in Q1 of 2012 and is expected to slide to $65 in Q2.
The flooding in Thailand led to a 29% reduction in the number of hard drives shipped in Q4 2012. That significant reduction in shipments is expected to end and production will be completely recovered by Q3 of 2012. The company reports that hard drive shipments increased by 18% to 145 million units in Q1 2012 and in Q2 increase by 10% to 159 million units.
ISuppli is predicting that shipments will increase again in Q3 2012 by another 10% to 176 million units. Q3 is expected to be the first quarter where shipments or exceed 2011 numbers. Despite the return to normal shipment levels, pricing is expected to remain flat with no decline.
“HDD manufacturers now have greater pricing power than they did in 2011, allowing them to keep ASPs steady,” said Fang Zhang, analyst for storage systems at IHS. “With the two mega-mergers between Seagate/Samsung and Western Digital/Hitachi GST, the two top suppliers held 85 percent 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.”
One reason pricing won't decline is that a number of original equipment manufacturers in the computer industry signed a long-term agreements with hard drive makers to guarantee drive shipments but locking in prices about 20% higher than were paid before the flooding.
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RE: It's the economy...
6/11/2012 11:24:47 PM
He's talking about the United States' climbing debt-to-GDP ratio. We're at about 104% last time I checked. Greece was at 140% when it defaulted on its loans and asked for bailouts.
The United States is too big to bail out, so if we don't cut federal spending and lower the deficit, then we run the risk of no one buying our bonds, which is already happening sadly. On top of all that, no one wants to lose entitlements, so politicians are stuck between a rock and a hard place because the only solution is austerity, and you can look to Greece to see how well that's working out.
Even Rand Paul's budget wouldn't zero out our debt until 15 years from now or so, which would either be too late, or would leave the economy sluggish for an awfully long time. On top of that, its so aggressive that neither Republicans nor Democrats can get behind it.
And trust me, while this guy comes off alarmist, he's not really. There's a reason Mitt Romney sold all his American stocks and holds only stock in Marriott companies that operate internationally. Two reasons actually, the Marriotts are long-time family friends, and if the United States defaults on its debt, then you aren't going to want to own the stock of an American company for awhile. He also started buying up tons of debt from countries with excellent debt-to-GDP ratios like Canada, Switzerland, New Zealand, and Australia. He also has a few million in Canadian dollars, which will hedge him against hyperinflation in America. He's not the only one doing this either. Why do you think Facebook's co-founder got out of this country? He's not stupid, he can read the writing on the wall.
"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook
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