iSuppli: Hard Drive Prices to Remain Inflated Until 2014

Paul Lilly

Get ready to hear "Told you so!" from the conspiracy theorists, because according to research firm IHS iSuppli, mechanical hard disk drive (HDD) prices aren't expected to ease back down to pre-flood levels until 2014. That means two more years of inflated HDD prices for consumers, even though hard drive production is "rapidly recovering from the catastrophe" that ravaged Thailand last year.

IHS iSuppli says the average selling price for the entire HDD market skyrocketed to $66 in the fourth quarter of 2011 following the floods, up 28 percent from $51 in the third. It's held steady since then and will only decline marginally to $65 in the second quarter of 2012, the research firm predicts.

Is there really a conspiracy by HDD manufacturers to keep prices high? IHS iSuppli to seems to support the notion, saying that HDD production is rising and is expected to recover completely by the third quarter of 2012.

"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."

So there you have it. Conspiracy theorists have some hard data to back their claims. Meanwhile, it's not difficult to find solid state drives selling for a dollar per gigabyte, or less, which is still a big premium compared to HDDs, but offer much better performance.

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