Hard drive pricing high through 2014, claims analyst
Hard drive prices are expected to remain elevated until the end of 2014, a report from Coughlin Associates claims.
Although companies are reporting that production will be back on track towards the end of this year, with Western Digital predicting a September return to normalcy, the impact of the floods is likely to be felt for quite some time. The most enthusiastic estimates suggest that pricing will be back on track towards the end of the year, but a new report casts doubt on that prediction.
According to US-based Coughlin Associates, hard drive prices will remain inflated throughout 2014 as a direct result of the Thai floods. This is despite predictions that supplies will return to normal before the year is out.
Initially, Coughlin's report claims, the extra income from the inflated prices will be used by companies to recover losses made as a result of the flooding. After that, however, prices are expected to remain at an inflated level in order to fund additional research and development into next-generation storage systems.
In other words: we'll be so used to paying higher prices for hard drives by 2014, manufacturers will be unwilling to drop the prices even if it could be afforded.
If that's the case, Coughlin's timeline doesn't look too unlikely. As a result of the flooding, Western Digital reported charges and expenses of $199 million with net income of just $145 million. As a result, it will take a year of greatly improved sales simply to earn back the money it has lost.
The news that the hard drive industry is recovering is welcome, of course, but it's certainly sounding like buyers can expect to be waiting a while for prices to drop down to pre-flood levels.
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Discuss in the forums ReplyThe HDD supply chain will of fully recovered (subject to not further natural disasters) by September this year, this includes clering oustanding backlogs and being at or above capacity to supply to current demands.
Assuming that goal is achieved, Q4 2012 should see prices staibilising and dropping accordinfly.... a little earlier than the 2014 predictions we see here.
Where as lowering prices back to pre-flood levels will stimulate sales faster thus recovering loss revenue quicker...the longer they keep prices inflated the harder it will be to recover lost revenue.
I guarantee that if they reduce prices back to what they were £50 to $60 for 2TB, they would sell triple what they are now with the inflated prices.
Your first sentence really confused me until I realised you meant "epitomises"... I read it as "optimises"
</pedant>
But in complete agreement here - more of this "Oh Gartner/IDC/etc say it's true so it must be", they are predictions - educated and informed predictions, but predictions none the less, like BBC telling you it's going to rain tomorrow.
I tend to agree with this, because people are going to stick with what they've go and not buy unless they have to. then the warehouses end up stocked to the roof and selling nothing so prices will drop again. maybe not as cheap as before, but some where close to it.
Fixt! :D
Looks like I'll be waiting for a while. I'll just have to live with the secondary NAS back-up until then. Of course, this will only complicate things by having non-identical back-ups, but I suppose that's an acceptable risk for now.
* corporates, data centres etc., who have an actual business need for drives of a given spec, and are unlikely just to be able to wait it out until drive prices soften to a level they like. Do you think Google and Facebook are going to stop building servers until HDD prices drop? Similarly, do you think Sony and Microsoft are going to stop making PS3s and Xbox 360s until the price of the drives inside them comes back down?
* new build systems, in which case the increased drive cost will make a real but small difference to overall system cost, but unlikely to be enough that average joe consumer will notice. Do you think the average man on the street could even identify a HDD inside a computer and tell you its functions ("it's the computer's memory, innit?"), let alone tell you what the market price of (say) a 2TB drive is now vs 12 months ago?!
* replacing broken drives, in which case most people (even those aware that prices have risen, which is by no means a majority) would suck up a slightly higher drive price (which, to be fair, is still a small fraction of overall component cost) rather than not have a working system. I know I would.
Anyway, the whole POINT of the drive price increases was the floods constricted supply - there weren't enough drives to go round, never mind "tripling" the volume, so prices went up.
It is simple supply and demand economics. There is no great conspiracy to fleece consumers on drive prices. Market forces brought prices down in a sustained fashion; an unexpected natural disaster broke the supply chain so market forces pushed prices back up; and now, over time, market forces will bring prices back down again.
BUt not back down to those prices before the end of 2014? I doubt that a lot.
I suspect that prices are back to "OK" for 2tb units within 3-6 months.