Is the Hard Drive Shortage Officially Over?

Late last year, flooding in Thailand caused a massive hiccup in hard drive production, leading to worldwide shortages. Following along with the pseudo rule of economics known as supply and demand, this quickly led to sharp price increases; some hard drive prices jumped as much as 300%.

According to the CEOs of Seagate and Western Digital, two of the leading hard drive manufacturers in the world, they have finally been able to bring production back up to pre-flood levels, meeting – and even exceeding – consumer demand. What this means for pricing is still up in the air.


Effects of the Shortage

Many drives, like Seagate’s Barracude Green saw 300% price increases and still sit at twice their previous price.

While hard drives themselves jumped massively in price on the consumer level, desktop and laptop prices held fast, at least for a short while. The products of large companies were mostly unaffected thanks in part to bulk agreements already in place with hard drive manufacturers as well as their ability to absorb increased costs. Apple’s MacBook line, for example, remained at the same price throughout the shortage.

Other companies, such as Lenovo, were hit much harder by the shortages. For a while, Lenovo simply didn’t have the hard drives available for some of their 750GB, 320GB, 250GB, and 160GB models. Their product prices didn’t necessarily go up, but many consumers had to settle for “off-spec” options.


What the Analysts had to Say

Going into December, which was the worst point of the shortage, stories were abuzz about how long the effects of the shortage might be felt. Some analyst firms, like IHS in particular, were fairly optimistic, expecting a gradual improvement starting as early as the first quarter of 2012. IHS even predicted that the added focus in production outside of Thailand could even result in an excess supply.

Other firms were much less optimistic, some claiming that the higher prices may even persist into 2013. It was thought that the soonest hard drive manufacturers would be able to meet immediate demand would be sometime in the second half of 2012.


The Current State of Things

As we mentioned earlier, the major players of the hard drive world have stated that they’ve already been able to meet the current demand; however, the two hard drive leaders don’t particularly agree on how things will play out from here.

Seagate’s CEO Steven Luczo is playing it safe (or perhaps taking advantage of the more pessimistic analyst reports), stating that there is still “a substantial and growing shortfall in unmet Exabyte demand resulting from the supply –chain disruptions caused by the floods.” In short, he plans on keep Seagate’s net gains high (they actually grew during the shortage).

Western Digital’s John Coyne had a different story to tell. He told analysts that “the recovery activities related to both WD operations and those of [its] supply chain partners impacted by the Thailand floods have reached a point where [Western Digital] now [has] the capability to adequately meet anticipated customer demand in the current quarter and beyond.” Western Digital was hit the hardest by the floods, so the fact that they have caught up with demand already is very good news. Hopefully WD gets its way, and prices will return to normal quickly.

Editor in Chief : Arie Struik

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