Hard drive shortage may have far-reaching effects

By Paul Mah, CIO |  Storage

Beyond price hikes, HDD vendors are taking other steps that may be shortage-related. Western Digital (WD) and Seagate recently reduced the warranty period for certain consumer-centric HDD models. Seagate cited a need to redirect the resultant savings towards technology innovation and more unique features for its products; WD did not provide a reason. The shortages of HDDs and industry consolidation of hard disk manufacturers is likely to have played a pivotal role by making such measures easier to force on the market without impacting sales.

In response to queries by CIO.com, Brian Ziel, senior director of Corporate Communications at Seagate said the company "is doing everything it can to satisfy its customers' supply requirements, including in some cases entering into long-term supply agreements." PC manufactures are generally reluctant to enter into long term agreements, and negotiate on a quarter-by-quarter basis to exact the best prices. It is hence plausible that PC makers may opt to pass on to customers any costs incurred from the long-term agreements.

One hypothesis that has been making the rounds is that the shortage of HDD will push demand towards solid-state drives (SSDs). That may well be the case for high-end desktop and laptops, but the continued price disparity and relatively low storage capacity of SSDs will likely limit its mainstream adoption.

The case for SMB adoption of SSDs in storage appliances or servers is even more tenuous, given the even higher cost of an SLC (Single level cell) SSD. So, while the HDD shortage may accelerate existing plans to adopt the use of SSDs, it is unlikely to persuade businesses that are not already convinced of their benefits.

Larger Enterprises to Get the Drives

At least one storage consultant is certain that the needs of larger and more lucrative enterprise customers will be prioritized over other types of customers. "The drive vendors have been forced into a limited-supply allocation scheme, and that means that their largest customers get the largest allocations and commitments at the expense of smaller system manufacturers," said Tom Buiocchi, CEO of Drobo, in an email.

That means large enterprises that routinely deploy SANs from the large storage vendors may see temporary price increases but are unlikely to experience disruption in the long run, leaving smaller businesses to bear the brunt of the supply shortage. SMBs will be squeezed by PC makers who may be inclined to pass on the higher cost of HDDs. Moreover, storage vendors serving the SMB market may find themselves left out of the limited supply allotments, forcing SMBs to acquire HDDs piecemeal at inflated prices from retailers.

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