News & Analysis
Comment
resistion
High 60's still cheap compared to SSD's I guess.
BobbieSmith
The Thailand floods of 2011 are now just excuses to keep the prices of retail ...
HDD prices expected to stay above pre-flood levels until 2014
Dylan McGrath
6/11/2012 2:01 AM EDT
SAN FRANCISCO—With production still being impacted by rampant flooding in Thailand last year, average selling prices (ASPs) of hard disk drives (HDDs) are expected to remain above pre-disaster levels through the rest of this year, according to market research firm IHS iSuppli.
While HDD production is rapidly recovering from the impact of the floods, which forced the closure of several HDD and HDD component production facilities, HDD ASPs are expected to remain inflated until 2014, IHS siad.
In the wake of the floods, the ASP for the entire HDD market soared to $66 in the fourth quarter of 2011, up 28 percent from $51 in the third quarter, IHS said. The ASP held steady at $66 in the first quarter, and is expected to decline marginally to $65 in the second quarter, according to IHS.
Meanwhile, after flooding caused a 29 percent plunge in shipments in the fourth quarter, HDD production is rising and will recover completely by the third quarter, according to IHS. Shipments rose by 18 percent to 145 million in the first quarter and by 10 percent to 159 million in the second quarter, according to the firm.
In the third quarter, shipments are expected to rise by another 10 percent to 176 million, IHS said. This will mark the first time in 2012 that shipments will exceed their 2011 quarterly levels, up from 173 million in the third quarter of 2011, according to IHS. Despite exceeding pre-flood shipment levels in the third quarter, pricing is expected to remain inflated, according to the firm
"HDD manufacturers now have greater pricing power than they did in 2011, allowing them to keep ASPs steady," said Fang Zhang, analyst for storage systems at IHS, in a statement.
According to Zhang, due to acquisition of Samsung's HDD business by Seagate last year and Hitachi Global Storage Technology by Western Digital earlier this year, the top two HDD suppliers held 85 percent market share in the first quarter of 2012. Prior to the acquisitions, the top two suppliers held 62 percent of the market, Zhang said.
"The concentration of market share has resulted in an oligarchy where the top players can control pricing and are able to keep ASPs at a relatively high level," Zhang said.
Because of concerns over HDD availability, an increasing number of PC OEMs have signed long-term agreements with HDD makers in the second quarter, according to IHS. These agreements provide shipment guarantees, but lock in pricing that is approximately 20 percent higher than pre-flood levels, IHS said.
Even if all the OEMs stop entering into long term agreements by the end of 2012, it would take about four quarters with a 6 percent sequential decline in the HDD ASP to reach the pre-flood pricing level, IHS said. However, given that there have been no consecutive 6 percent sequential quarterly declines during the past three years, it's unlikely that it would happen now, IHS said.
While HDD production is rapidly recovering from the impact of the floods, which forced the closure of several HDD and HDD component production facilities, HDD ASPs are expected to remain inflated until 2014, IHS siad.
In the wake of the floods, the ASP for the entire HDD market soared to $66 in the fourth quarter of 2011, up 28 percent from $51 in the third quarter, IHS said. The ASP held steady at $66 in the first quarter, and is expected to decline marginally to $65 in the second quarter, according to IHS.
Meanwhile, after flooding caused a 29 percent plunge in shipments in the fourth quarter, HDD production is rising and will recover completely by the third quarter, according to IHS. Shipments rose by 18 percent to 145 million in the first quarter and by 10 percent to 159 million in the second quarter, according to the firm.
In the third quarter, shipments are expected to rise by another 10 percent to 176 million, IHS said. This will mark the first time in 2012 that shipments will exceed their 2011 quarterly levels, up from 173 million in the third quarter of 2011, according to IHS. Despite exceeding pre-flood shipment levels in the third quarter, pricing is expected to remain inflated, according to the firm
"HDD manufacturers now have greater pricing power than they did in 2011, allowing them to keep ASPs steady," said Fang Zhang, analyst for storage systems at IHS, in a statement.
According to Zhang, due to acquisition of Samsung's HDD business by Seagate last year and Hitachi Global Storage Technology by Western Digital earlier this year, the top two HDD suppliers held 85 percent market share in the first quarter of 2012. Prior to the acquisitions, the top two suppliers held 62 percent of the market, Zhang said.
"The concentration of market share has resulted in an oligarchy where the top players can control pricing and are able to keep ASPs at a relatively high level," Zhang said.
Because of concerns over HDD availability, an increasing number of PC OEMs have signed long-term agreements with HDD makers in the second quarter, according to IHS. These agreements provide shipment guarantees, but lock in pricing that is approximately 20 percent higher than pre-flood levels, IHS said.
Even if all the OEMs stop entering into long term agreements by the end of 2012, it would take about four quarters with a 6 percent sequential decline in the HDD ASP to reach the pre-flood pricing level, IHS said. However, given that there have been no consecutive 6 percent sequential quarterly declines during the past three years, it's unlikely that it would happen now, IHS said.
|
|
|
|
|
Navigate to related information
BobbieSmith
6/11/2012 4:11 PM EDT
The Thailand floods of 2011 are now just excuses to keep the prices of retail HDD's inflated. We will see record quarterly earnings for both WD and Seagate over the next year.
We went from 4 big players down to 2. It will be a good academic study on monopolies and how they are bad for customers. Seagate and WD have absolutely zero incentive to lower prices anytime soon. Just keep pushing out press releases about how the flooding continues to be the root cause.
Sign in to Reply
resistion
6/11/2012 11:06 PM EDT
High 60's still cheap compared to SSD's I guess.
Sign in to Reply