HDD Prices Will Return to Historical Levels, but Slowly

Before Thailand got hit by floods back in late 2011, hard drives were very cheap, much cheaper than they are now. The prices went up by factors of 2 and 3 immediately after the disaster though, and it is a sad fact that the return to normal levels won't be nearly as fast.

Of course, that HDDs continue to be overpriced even more than a year after that event is clear enough proof of that.

The reason the Thai floods affected HDDs so much was because Western Digital, Seagate and most of the companies supplying them with components had their major factories there.

When the water rose, it affected most every facility, inflicting a heavy blow to the supply chain.

Ultimately, the worries that there wouldn't be enough HDDs to go around proved a bit overblown, though not unfounded.

Sadly, companies and consumers thought they had no choice but to order large shipments of HDDs as soon as the bad news hit, but by then, the prices had already skyrocketed.

Since then, hard disks have been selling for more than they did even before the economic recession hit (Q2 2009).

Now, they have mostly returned to the pre-crisis levels, but that's not saying much when pre-Thai flood levels were so much lower.

Seagate and WD have ASPs (average selling prices) of $63 / 46-63 Euro, versus the pre-flood level of $45-55 / 33-45-55 Euro.

In theory, tags will go lower bit by bit over the next few years. In practice, HDD makers don't want to let things go down too fast. They are doing what they can to maintain average prices, as all corporations in a capitalist world are wont to do.

“We obviously have more capacity than what we are producing because we are throttling it to what we see as demand,” said Stephen Milligan, chief executive officer of WD. “But we are taking actions to reset our capacity potential to a more appropriate level. [...] Not that we do not expect to see growth, but not at the same rates than what we have historically done.”