Seagate says hard drive industry will take a year to recover

Subject: Storage | November 19, 2011 - 04:25 PM |
Tagged: thailand, Seagate, Hard Drive, flooding

Last month we noticed that hard drive prices were spiking very high and we took a quick look at exactly why this was: most notably, the devastating flooding in Thailand.  While at one point you could buy 2TB hard drives for under the $100 mark when on special, those days seem long gone.  Our original story quoted the CEO of Western Digital as saying it could take "multiple quarters" for recovery to occur.

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Pricing graph from Pricegrabber.com for Western Digital Caviar Black 2TB

According to this quote seen on Bloomberg, Seagate's CEO, Stephen Luczo, says it might be much worse:

The projections by some Wall Street analysts that production will be back to pre-flood levels by summer are nonsense, Luczo says.

“This is going to take a lot longer than people are assuming, until the end of 2012 at least,” he says. “And by then, demand will have gone up.”

Well....crap.  Users looking to build new systems or even buy them from third parties will likely see increases in costs because of this.  And while not every need can really be addressed by SSDs (I type while looking for room on a system using one to install Skyrim...), the hard drive price increases could drive quicker adoption of solid state media in the near term. 

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In the interim, if you happen to find a good deal on spindle based hard drives, you might want to gobble them up!  Newegg has 2TB hard drives starting at $199 while Amazon has some starting at $174.

Source: Bloomberg
November 20, 2011 | 03:15 AM - Posted by djotter

It makes you wonder, how much of the delay and increased prices is from production interruptions and how much is PR spin and someone seeing the media attention as an excuse to keep prices higher for a bit longer?

Perhaps some quick money to be made, but perhaps a PR disaster in the long run?

November 20, 2011 | 07:46 AM - Posted by Mark (not verified)

BIGTIME pr spin, ohh gee look HD prices were dirt cheap and then bam something happened to tripple the prices....and why would they be in a hurry?

November 20, 2011 | 11:42 AM - Posted by Ryan Shrout

You guys really think so? If that is true, then we only need to wait for one of the companies to want to profit by lowering prices slightly, then the competition will respond. It will loop and we should be back down to close to where we were.

I hope these PR predictions are false - but I worry they are not.

November 22, 2011 | 05:46 PM - Posted by jsepeta

I've seen Walmarts out in the hinterlands repricing existing stock to $70 more than prices were last month, so I expect the price gouging to last as long as they can string it out. I agree w/ mr norton - if only SSD's weren't priced into the stratosphere for 500gb+ drives... they could even use a cheaper tech to make 3.5" ssd devices, ones that fit the space in standard desktops, and they'd be usable by most. doesn't have to be great, just good enough (the lesson we learned from microsoft windows)

soooo glad I maxxed out my Mac drobo with 4 * 2tb black caviars this spring. the PC drobo will have to wait I guess.

November 20, 2011 | 12:25 PM - Posted by pdjblum

I recall reading that most of the affected production lines were once again up and running a few weeks ago. I find it hard to believe that it would take until the end of 2012 to return to where things were pre-flooding. Another scenario is that the companies are quietly agreeing not to undercut one another so to take advantage of the windfall.

November 20, 2011 | 01:21 PM - Posted by Sihastru

The longer it takes them to "recover" the more profit they will have. If the prediction is not grim enough then potential buyers will choose to postpone their acquisition, but if the prediction is extremely grim then all potential buyers will give in to their needs and just buy now.

And when Western Digital (the largest of them all) is the only HDD manufacturer that was actually affected on a longer term, all the other manufacturers will sell their (mostly) unaffected stocks at a seriously larger markup value. Somewhere between 300% and 700% more PROFIT (the prices will be just 150%-250% higher, but the profit margin is a lot higher compared to the normal situation). All this without having any real competition, since WD left a big supply hole.

If you are not Western Digital and if you are in the HDD business, it is in your best interest to artificially enhance the problem. By the time the WD giant wakes up again, you made a nice chunk of change and also would have gained a few very valuable market share points.

November 20, 2011 | 02:35 PM - Posted by Mark (not verified)

yea its called gouging. I mean even newegg. 3x pricing on everything across the board for existing stocks...comeon....

A 20% increase is reasonable but 300%?

They get monsoons EVERY year, this has to be a planned event. If it takes 1 year to recover ohh gee....1 year till the monsoons flood everything again.

This is just verbal spin to advance their position for justification, does not mean their right does not even mean prices will remain high, their just expressing their feelings.

November 20, 2011 | 07:03 PM - Posted by Eric (not verified)

Well, they're public companies, therefore they report every quarter. We'll know before too long if sales are down because of decreased supply, or if profits skyrocket due to price increases with normal supply.

If Seagate reports next quarter and the headlines are 'Profits up 70%!' you'll know it was all just a PR spin to get people to pay more than they would otherwise.

November 20, 2011 | 09:49 PM - Posted by 0156 (not verified)

At this point I am more than happy to wait out a purchase on large storage. If I need an OS drive well, like was mentioned in the news folks like myself will start giving the SSD market a closer look now.

November 22, 2011 | 04:50 PM - Posted by thezfunk

I still see external hard drives for decent prices around at local box stores. Is there some sort of database or way of knowing what hard drives are in those things? If I were getting a new drive it would be a Western Digital Black. Are there any external drive enclosures sitting in a big box store full of Western Digital Blacks?

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