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.
Just in case you haven't gotten the memo yet: HDD prices haven't returned to pre-flood levels, and don't expect them to anytime soon. Don't take our word for it; that information's coming straight from the horse's mouth, as a European sales director for Western Digital -- one of the two big HDD manufacturers -- recently said that prices won't drop that low until next year.
Flood waters may have receded in Thailand, but the hard drive industry is still reeling under the effects of the disaster. The impact hasn’t been restricted to the hard drive industry alone, though. The ensuing hard drive shortage has lead to serious supply chain disruptions in the PC industry, impacting everyone from PC vendors to chip makers.
We hate to be constantly beating the doomsday drum on the hard drive crisis in Thailand, but Seagate isn’t making any easier to give this a positive spin. According to Chief Executive Officer Stephen J. Luczo, Wall Street is talking nonsense if they think drive production will reach pre-flood as estimated in the summer of 2012. Instead Luczo estimates it will take a full 12 months to bring everything back online, and he expects it to be a difficult road ahead for the entire industry since more than 130 of its suppliers are still under three feet of water.
Now is not the time to buy a mechanical hard drive, not unless you absolutely have to. As you know, the recent flooding in Thailand hit the hard drive industry pretty hard (from a technology standpoint -- obviously the biggest tragedy here is the impact it had on people's lives), and even just a 1TB hard drive is going to set you back about $150 street, almost triple what they selling for prior to the flood. Is the shortage really that bad?
You may have already noticed that the cost of hard drives has shot up since the severe flooding in Thailand. In addition to bringing devastation to the people and economy in that region, the flooding also disrupted operations at more than a dozen hard drive factories, resulting in "significant" damage. According to the International Data Corporation (IDC), this will have a direct impact on worldwide PC shipments through at least the first half of 2012.
The impact of flooding in Thailand on PC inventories going into the holiday has been widely reported, but an obvious connection we’ve been missing has been raised by the New York Times, and it’s an important one. According to interviews conducted by Nick Bilton, cloud computing could grind to a halt early next year as storage prices skyrocket, and supply reaches historic lows. Flooding in the region has shuttered more than 1,000 factories, including several which are responsible for pumping out a significant percentage of the world’s mechanical hard drives.
Need more storage space? If you don't fancy yourself a gambler, it's a good idea to shop hard drives now rather than roll the dice that prices for mechanical storage will stay dirt cheap. The flooding in Thailand hit the hard drive industry pretty hard and it's now expected that HDD prices will go up as component costs rise and inventory gets low.