Hard drive pricing high through 2014, claims analyst

February 14, 2012 | 11:26

Tags: #flooding #hard-drives #thailand

Companies: #coughlin-associates #seagate #western-digital

An investigation into the hard drive industry suggests that, while it is recovering from the flooding in Thailand that shut down much of its production capabilities, prices will remain inflated for the next two or three years.

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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