In the fall of 2011, PC hard drive prices skyrocketed. This was due mostly to the lack of supply following some massive floods in Thailand, which caused a number of hard drive factories to shut down their operations for weeks. Prices for hard drives went up by as much as 40 percent at one point.
Things have improved for the hard drive industry as the flooding in Thailand has subsided and the factories are returning to normal operations. However, prices for hard drives have continued to be much higher than they were prior to the flooding. In a recent press release from analyst firm IHS iSuppli, the company said that the average price for a hard drive was $66 in the fourth quarter of 2011. The organization predicts that price will go down to just $65 in the second quarter of 2012.
This elevated price point is happening even though production of hard drives is expected to reach pre-flood levels by the third quarter of 2012. So why haven't we seen a bigger price drop? According to IHS iSuppli storage systems analyst Fang Zhang, the biggest reason is the hard drive business is now controlled by a only a small amount of companies. He states.
With the two mega-mergers between Seagate/Samsung and Western Digital/Hitachi GST, the two top suppliers held 85 percent of HDD market share in the first quarter 2012. This was up from 62 percent in the third quarter of 2011, before the mergers. 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.
The report claims that ultimately, PC hard drive prices won't go down to normal until sometime in 2014.
Source: IHS iSuppli