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HDD industry to see record revenue as shipments return to normal

Posted at 06 April 2012 00:57 CEST by Justin_Massoud

The hard disk drive industry faced a rocky start to the year, with shipment numbers down as companies continued to deal with the aftermath of last fall’s devastating Thailand floods. Consumers have also been hit hard thanks to inflated HDD price tags, even at popular online shops. According to research group IDC, some normalcy should return later this year. Prices will drop, and shipments will rise. We’ve heard it all before, but hearing it again doesn’t hurt.

One of the more surprising notes from IDC’s forecast is that while total 2012 shipment figures will increase 7.7 percent over last year, revenue growth will actually be higher. An industry precedent, claims the group, and one built on months of higher-than-average HDD prices.

“In many respects, the hard disk drive industry has collectively hit the ‘reset’ button,” said John Rydning, HDD research vice president, IDC. “A reset of the HDD industry structure should allow for the remaining HDD industry participants to slowly reduce HDD prices from current levels at a rate that still delivers value to customers, while at the same time ensuring sufficient funding is available to develop new HDD technologies that are needed to improve HDD capacity, performance, reliability, power consumption, and security.”

A quick check of online HDD tracker Camelegg reveals that price downturn has already begun. A 1TB Seagate Barrcuda fell from around $140 in February to $100 this month. Of course, just weeks before floods crippled Thailand factories and disrupted companies’ supply chains, the product was only $50. Western Digital’s 1TB Scorpio Blue HDD dropped from a sky-high $230 last December to a more reasonable $130 in February. Its lowest price was $100 last summer.

Rydning and co. believe HDD makers will shift resources to hybrid drives as revenue from traditional PC products begins to dwindle. A separate report speculates that should ultrabooks take off and replace standard notebooks, companies will have no choice but to focus on hybrid drives. Seagate has already hit a milestone with its Momentus XT hybrid HDD, announcing last August that it had shipped one million units of the device.

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There are 9 comments

tmc8080
MyCE Resident
Posted on: 06 Apr 12 01:35
    Not surprising that the HDD industry doesn't want to go back to $50 per TB after getting upwards of $230 for the same product. 1tb SSD drives are still over $500 and that's a shame. There's no reason why SSD drives have to be this expensive. Also, where are those 4+ TB drives promised over 15 months ago?!?
    Innovate or die..
    paulw2
    MyCE Senior Member
    Posted on: 06 Apr 12 09:03
      Are these drives still all being made in Thailand?? The company I work for used to make all these fone gear in Thailand and got hit hard with the foods. Now all the stuff is being made in Japan again. I suspect that they won't be moving production back to Thailand any time soon. China most likely next..
      tmc8080
      MyCE Resident
      Posted on: 06 Apr 12 11:37
        The reason HDD manfacturing went to Thailand in the first place was it had the CHEAPE$T labor of all the Asian countries. Manufacturing the parts is cheaper eslewhere.. so they ship in parts and asemble in Thailand. I believe that one day HDD manfacturing will be a zero physical labor process (even QC).. at least that's what i think they are working towards (with HAMR hard drives).. Once they figure that out it will all be done in China or Malaysia instead of Thailand.
        Seán
        Senior Administrator & Reviewer
        Posted on: 06 Apr 12 11:56
          This maintaining of higher prices likely explains why they were quick to scrap the long warranties of new HDDs after the floods. Beforehand, HDDs were getting so cheap that many people just bought another instead of RMAing a 2+ year old failed HDD.

          As the warranties gradually expire for older HDDs over the next few years, it also means if they sustain their higher prices, consumers with failed HDDs out of warranty (some 1 year old) would be forced to buy a new one, generating added revenue again.
          CharmedonWB
          MyCE Member
          Posted on: 06 Apr 12 12:39
            Prices most likely will not fall back to pre flood prices. People are paying the ridiculous prices now and revenues are higher so where is the incentive of going cheaper? Although I am in need of a few HDDs, I am unwilling to pay anymore for hard drives than I did prior to the flood.
            coolcolors
            MyCE Resident
            Posted on: 06 Apr 12 21:49
              Quote:
              Originally Posted by CharmedonWB
              Prices most likely will not fall back to pre flood prices. People are paying the ridiculous prices now and revenues are higher so where is the incentive of going cheaper? Although I am in need of a few HDDs, I am unwilling to pay anymore for hard drives than I did prior to the flood.
              Your not kidding I go lucky and bought my 3TB before the prices went up and glad I did. Should've bought 2 3TB but didn't have the cash at that time and not regret doing that......not buying two 3TB drive to keep around. But one 3TB is good though.....I most likely hold off til 2013 at the earlier to buy HDD drives again if prices ever go back down.
              Arachne
              Senior Administrator & Reviewer
              Posted on: 06 Apr 12 22:20
                Quote:
                Originally Posted by CharmedonWB
                Prices most likely will not fall back to pre flood prices. People are paying the ridiculous prices now and revenues are higher so where is the incentive of going cheaper?
                Rats...I was hoping that wouldn't be the case, but I think you're right.

                Quote:
                Although I am in need of a few HDDs, I am unwilling to pay anymore for hard drives than I did prior to the flood.
                Ditto.
                BradWright
                MyCE Member
                Posted on: 07 Apr 12 04:54
                  I predict the prices will come back down. But the drives will be cheap, low quality drives with maybe 90-day warranties, and they will fail relatively quickly. The revenue will come from people constantly having to replace failed drives. I think there are only a couple manufacturers left that have bought out everyone else, and already you can't get more than a 1-year warranty instead of the 3-year warrantly we used to get.
                  tmc8080
                  MyCE Resident
                  Posted on: 10 Apr 12 01:50
                    Yes, some were predicting a return to lower prices in late February, but that didn't hit until late March (the march back towards MSRP, that is.. not pre-flood prices). Prices will come down but there's alot of uncertainty in world markets, oil prices and such which makes any new predictions speculation at best. Demand for PC's and hard drives hasn't grown becuase many purchases have been delayed with the expectation that prices will drop.. and an new game of chicken ensues... typically manufacturers don't want products such as this sitting in warehouses for more than 6 months so what is MORE likely to happen is they will use maufacturing "STRUGGLES" as an excuse to keep prices high for another 6 months before coming to the rescue next holiday season with a 20% above pre-flood prices (jeez, can ya spare it, give NO innovation from R&D produced at 4tb hard drive yet!!, lazy R&D bastards!)

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