Hard drive shortage may have far-reaching effects

By Paul Mah, CIO |  Storage

Storm clouds continue brewing in the usually uneventful land of hard disk drives.

The severe flooding that inundated Thailand a few months ago swamped more than 1,000 factories, including some of the world's largest hard disk drive (HDD) manufacturers. Toshiba had to halt production in the majority of its hard disk production facilities, while world number one HDD maker Western Digital ceased all production in the country.

The flood in Thailand has since receded, and the various manufacturers and their suppliers have scrambled to replace waterlogged machinery and restart production. However, this hiccup in production has far-reaching consequences to the global supply of hard disk drives.

Some expect the current supply chain shortage to take up to a year resolve. In a Computerworld report, IDC analyst John Rydning said, "We expect the situation will improve, but it won't feel as if things are back to normal until 2013." Intel chief financial officer Stacy J. Smith mirrored that stance, telling analysts in a December 12 conference call that the company expects the shortage of HDD to be "pretty significant" in the early part of 2012.

Seagate, the only HDD manufacturer to avoid direct damage from the flood, points out that overall capacity demand is growing currently at 40 to 50% per year. That means even if unit supply were to recover earlier than expected, unmet capacity demand would still pose a problem.

Significant HDD Price Spike

When flood waters caused production of HDD to be suspended, the first to be affected was the retail sector because manufacturers yanked the distribution of product over to OEMs to avoid supply disruptions. This resulted in a spike of 50% to 150% in the price of consumer hard disks almost immediately, according to analytics data supplied by real-time ecommerce tracking company Dynamic Data. The company reached its conclusions by tracking prices of the top 50 HDDs models across its database of 3,000 merchants. This price has since come down slightly, but is still at an all-time high compared to the first nine months of 2011.

The shortage of HDD has also hit PC makers particularly hard. Indeed, market research firm IHS iSuppli has cut its PC market forecast, projecting a 3.8 million-unit shortfall in the first quarter of 2012. After all, you can't sell a PC without a storage drive. On the enterprise front, storage vendors such as EMC, NetApp and Hitachi Data Systems have announced temporary price hikes of 5% to 15% for their HDDs.

Warranties and SSDs

Originally published on CIO |  Click here to read the original story.
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