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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6/12/2012 1:03:49 PM
HDD prices are already starting returning to what they were. 2014 is a bit far off. I'd give in another year.
This is all great for the consumer though, because its accelerating adoption of SSD. SSD is dropping in price and expanding in storage space (and thereby they $ per GB is dropping faster) than HDD.
HDD is the new floppy disk now. In two years I predict 2TB SSDs for roughly $349 on SATA IV crossing the 1GB/s sequential mark. HDD may well be reaching 6-8TB by then, but a simple matter of cost is going to drive them out of the market. Its going to become far cheaper to produce these as the flash chip fabs pay for themselves. Every year the price is going to stay the same for roughly twice the capacity.
By 2020 these things are going to be so quick, RAM and SSDs will start to be reduced into one non-volatile storage facility sitting with out kids telling them about the time when storage used to be put on these small metal disks that would rotate seven thousand times per second in the snow uphill both ways!
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