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HDD prices fall as Thailand floods aftermath subsides

And SSD prices have dropped by 23% over the past year

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Hard disk drive (HDD) prices are finally beginning to drop following their recent inflation caused by the Thailand floods which severely affected global electronics production.

Drive maker Western Digital was hardest hit by the flooding, with research firm IDC predicting that up to 75% of the company's production lines were temporarily shut down.

According to new information from e-commerce tracking site Dynamite Data, the top 50 hard drives on sites such as Newegg.com and Tigerdirect.com, leaped in price by 50% to 150% after the flooding. The price jump was kicked off in October when drive inventory levels plummeted 90% in less than a week, according to Kristopher Kubicki, data architect at Dynamite Data.

"The first flooding was October 8 and within a week, two weeks at the most, almost all that inventory at distribution had dried up," Kubicki said. "I'm not sure if that was distributors getting the inventory recalled from them or if it was getting purchased that fast. I think consciously people moved it out of distribution and into system manufacturers."

Some HDD inventories still short

Over the past few weeks, hard drive prices have levelled off and have begun to drop slowly, according to Dyanamyte's data.

"For first time, less than week after Western Digital's first fabrication plant went back on line, drive inventory began increasing at both distributors and e-commerce sites, and index prices began coming down a little too," Kubicki said.

IDC has predicted that HDD supply shortages in the wake of Thailand flooding would affect consumers, computer system manufacturers and corporate IT shops into 2013.

Fang Zhang, an analyst with market research firm IHS iSuppli, said he also saw "a few" HDD price drops - especially in the retail market this month - from the historical highs after the floods.

However, Zhang cautioned that certain drive inventories are still short, such as 500GB and 1TB capacity models for both desktop and notebook PCs.

Zhang said he expects hard drive supplies to be at their low point next quarter, but he said prices will begin to decline in the latter part of the first quarter of 2012.

Rush for SSDs

"And the trend will continue throughout 2012," he told Computerworld. "HDD Supply could meet demand in the third quarter of 2012 because production volumes will start to increase in the first quarter of 2012."

The drop in hard drive availability in October also correlated with a sharp drop in solid-state drive (SSD) prices, according to Dynamite's data. SSD prices fell 23% online over the past year, despite a brief price increase in November, Kubicki's data showed.

Data from DRAMeXchange also showed that rush orders for SSDs increased after the Thailand flooding disrupted hard disk drive supplies.

According to DRAMeXchange, a research division of TrendForce, rush orders for SSDs rose even as shipments of end-market products, including PCs, smartphones and tablet PCs, remained sluggish because of slow economic conditions.

Kubicki also noted that the number of e-commerce SSD reviews has increased faster than HDD reviews over the past year.

While vendors are expected to keep their most valuable customers - computer system manufacturers - supplied with inventory, the consumer retail market will likely be hit by shortages and price increases, analysts say.

Two industry research firms, IHS iSuppli and IDC, have predicted that the overall market shortfall due to factory flooding in Thailand will reach 25% to 28% over the next six months.



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