Current HDD prices in line with pre-recession levels
The hard drive industry was hit particularly hard by the 2011 floods in Thailand, which is the second biggest producer of hard drives behind China. The devastating deluge was accompanied by a sharp increase in hard drive prices, with the average selling price for HDDs shooting up 28 percent to reach $66 in Q4 2011 (Q2 FY2012). Although a return to pre-flood prices does not seem likely in the immediate future, things aren’t nearly as bad as they were an year ago.
According to data filed by Seagate and Western Digital with the Securities and Exchange Commission (SEC) and compiled by X-bit labs, the average selling price of HDDs during the last two quarters of calendar 2012 (Q1-Q2 FY2013) declined to $62 - $63 per unit. While still far from the pre-flood prices of between $45 and $55 per unit, the current levels are reminiscent of the prices observed just prior to the global economic downturn in 2008.
“We obviously have more capacity than what we are producing because we are throttling it to what we see as demand. But we are taking actions to reset our capacity potential to a more appropriate level given what we view the secular changes in terms of the overall demand profile for the industry. Not that we do not expect to see growth, but not at the same rates than what we have historically done. […] There are multiple opportunities that we have as an organization to continue to improve our cost structure,” Milligan said.