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HDD Makers Want Long-Term Contracts With PC Vendors

By - Source: DigiTimes | B 37 comments

Hard drive manufacturers reportedly want PC vendors to sign a one-year contract, locking them at the current inflated price and volume.

Due to the tight supply of hard drives stemming from the Thailand flooding back in October and November, hard drive manufacturers have reportedly asked PC vendors to sign a one-year contract at specified prices and volumes to ensure their required number of units.

While hard drive manufacturers and component makers have largely resumed operations within the last month, they're not at optimum level, and the pace of recovery varies from factory to factory, making it hard to determine if the worst-case supply scenario is over. As it stands now, hard drive makers expect the global unit output to decline 30-percent sequentially in 4Q11 and extend on into 1Q12, producing only 140 million units between January and the end of March.

Yet many PC vendors are reluctant to sign a one-year contract. According to industry insiders, the vendors fear that hard drive prices may drop sharply once the supply chain fully recovers from the impact of the floods, and the contract will be locking them in at the higher, inflated price. Currently many PC vendors are purchasing hard drives on a quarterly basis.

Meanwhile, Stellar Data Recovery reports that PC vendors will likely turn to the "grey market" to acquire the hard drives not supplied in the normal channels. The grey market is defined as "the trade of a commodity through distribution channels which, while legal, are unofficial, unauthorized, or unintended by the original manufacturer."

"The lack of good quality HDDs means computer manufacturers will seek out other markets and procurement channels in order to meet demand," the company reports. "The grey market is likely to appear in the guise of an attractive and easy alternative. Stellar Data Recovery is keeping a vigilant eye on this alarming development, for the simple reason that HDDs from grey sources are more likely to fail, as they are unlikely to have undergone all the necessary quality checks. Normally, Stellar Data Recovery is able to recover lost data, even from ‘grey’ HDDs. Nonetheless, the increase in data loss and downtime due to the reduced quality of HDDs will have unwanted knock-on effects for many businesses in the future. "

Using HDDs supplied by the grey market means the quality of many products, PCs, laptops and cheaper servers could be compromised, the company said.

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  • 18 Hide
    Anonymous , December 29, 2011 12:47 AM
    "Hard drive manufacturers reportedly want PC vendors to sign a one-year contract, locking them at the current inflated price and volume."

    Bhahahahahhaha

    "[...] for the simple reason that HDDs from grey sources are more likely to fail, as they are unlikely to have undergone all the necessary quality checks"

    Wait, Seagate isn't a grey source? Then why the ---- do their drives suck so much!!

    Also they (all manufacturers - started by Seagate) are reducing their warranties to 2 years, why the hell do they deserve any business anymore....

    Go, ssds, prices go down, sh-t's done!
  • 10 Hide
    drwho1 , December 29, 2011 1:14 AM
    I bet that in about 2 years this madness will be gone.
    4TB will be common and they will be around $100 +/-.
    That's when I will buy new hard drives.

Other Comments
  • 18 Hide
    Anonymous , December 29, 2011 12:47 AM
    "Hard drive manufacturers reportedly want PC vendors to sign a one-year contract, locking them at the current inflated price and volume."

    Bhahahahahhaha

    "[...] for the simple reason that HDDs from grey sources are more likely to fail, as they are unlikely to have undergone all the necessary quality checks"

    Wait, Seagate isn't a grey source? Then why the ---- do their drives suck so much!!

    Also they (all manufacturers - started by Seagate) are reducing their warranties to 2 years, why the hell do they deserve any business anymore....

    Go, ssds, prices go down, sh-t's done!
  • 8 Hide
    Gin Fushicho , December 29, 2011 12:49 AM
    Geez... anything to make extra money huh?
  • 3 Hide
    alikum , December 29, 2011 12:53 AM
    Gin FushichoGeez... anything to make extra money huh?

    Haven't you received the memo? It's a ploy for these bastards to earn. The shortage affects about 40% of the global HDD supplies but the prices in my country are jacked up by as much as 120%. These manufacturers would be laughing their asses off as of ... right now.
  • 7 Hide
    sixdegree , December 29, 2011 12:53 AM
    This is what happened when there is little to no competition in terms of production of HDD: the prices skyrocketed and the consumer wallet's raped.
  • 1 Hide
    Anonymous , December 29, 2011 1:14 AM
    HDD manufactures need to pad their revenue numbers to make the shareholders happy.
  • 10 Hide
    drwho1 , December 29, 2011 1:14 AM
    I bet that in about 2 years this madness will be gone.
    4TB will be common and they will be around $100 +/-.
    That's when I will buy new hard drives.

  • -5 Hide
    kyuuketsuki , December 29, 2011 1:16 AM
    Pazero01Wait, Seagate isn't a grey source? Then why the ---- do their drives suck so much!!Haven't had any issues with my Seagate HDDs.
    Quote:
    Also they (all manufacturers - started by Seagate) are reducing their warranties to 2 years, why the hell do they deserve any business anymore
    Actually, Seagate's warranties are only 1 year, if I remember correctly (depends on the model). But... what of it?
    Quote:
    Go, ssds, prices go down, sh-t's done!
    While I'm all for SSDs, they'll never be cheap enough to make sense for mass storage of data which doesn't benefit from SSDs' strengths (practically non-existent seek times and random access), which accounts for quite a lot of data. SSDs only make sense as OS, page file, and application data drives.
    [/quote]
  • 7 Hide
    kyuuketsuki , December 29, 2011 1:16 AM
    Damn, Tom's, you *STILL* really need a freaking edit function.
  • 8 Hide
    jhansonxi , December 29, 2011 1:32 AM
    I'm sure SSD manufacturers are not at all upset about this development. :D 
  • 4 Hide
    elbert , December 29, 2011 1:35 AM
    I think all PC vendors need to switch to low cost SSD's in the 60~120GB range. Let HD makers sink or swim trying to sale them at high prices.
  • -2 Hide
    elbert , December 29, 2011 2:03 AM
    frozonicwont happen.... average people care more about the amount of storage they have rather than their speed.

    Well let average people see a $200 price increase for 500GB storage addon.
  • -9 Hide
    dimar , December 29, 2011 2:14 AM
    Instead of rebuilding the flooded HDD factories, they should completely phase-out / discontinue all HDD production, and build cutting-edge SSD facilities!!!
  • 0 Hide
    alidan , December 29, 2011 2:50 AM
    Pazero01"Hard drive manufacturers reportedly want PC vendors to sign a one-year contract, locking them at the current inflated price and volume."Bhahahahahhaha"[...] for the simple reason that HDDs from grey sources are more likely to fail, as they are unlikely to have undergone all the necessary quality checks"Wait, Seagate isn't a grey source? Then why the ---- do their drives suck so much!!Also they (all manufacturers - started by Seagate) are reducing their warranties to 2 years, why the hell do they deserve any business anymore....Go, ssds, prices go down, sh-t's done!


    SSD prices will go down as more people go there, hard drive prices also go down much of people go there.

    sixdegreeThis is what happened when there is little to no competition in terms of production of HDD: the prices skyrocketed and the consumer wallet's raped.


    no this is what happened when most manufacturers are in one location and a natural disaster hits.

    drwho1I bet that in about 2 years this madness will be gone.4TB will be common and they will be around $100 +/-.That's when I will buy new hard drives.


    4 TB right now is the biggest hard drive you can buy. Even without flooding they would be $200-$300 each. One something bigger than 4 TB comes around they'll hit the $150-$250 mark and I'm one for termites can be consolidated down to one or two platters they would hit the $70-$100 mark.

    Kyuuketsuki
    Pazero01Wait, Seagate isn't a grey source? Then why the ---- do their drives suck so much!!Haven't had any issues with my Seagate HDDs.Actually, Seagate's warranties are only 1 year, if I remember correctly (depends on the model). But... what of it?While I'm all for SSDs, they'll never be cheap enough to make sense for mass storage of data which doesn't benefit from SSDs' strengths (practically non-existent seek times and random access), which accounts for quite a lot of data. SSDs only make sense as OS, page file, and application data drives.


    1080 P video wasn't going anywhere soon, and realistically] see anything tired and 1080 P for years before comes mainstream. In all honesty most video doesn't need to you go higher than 1080 P for home viewing. I'm saying this because right now 1080 P are among the biggest files you can get legitimately.

    If you got compressed 1080 P that's still close to 4 to 8 GB a movie.

    Depending on how fast SSD pushes the nanometer, we might see 10 nm soon, it may not be four processors but for storage 10 nm would bring SSD down to about $.35 a gigabyte that would make a mass storage SSD a viable option, $100-$200 will get you 200 to 500 GB, and that's honestly more than most people would never need.

    I'm not denying that the SSD's have better uses, but if it's putting one drive and the computer or two drives a manufacturer is going to put one drive in over two. And by the time it SSD's to become a mass storage drives I'm assuming they be gigabytes the second was probably a few hundred thousand IOPS . At that point this speed overcomes the whole more space thing. The reason why hard drive manufacturers are pushing larger and larger platter sizes isn't because we need the space, is because they only put one platter hard drive it makes them more reliable, less likely to fail, and cheaper overall. Basically they're making more money. But most people right now 1-2 TB hard drive minimum. people point out a lot, there aren't many legitimate uses for crap tons of space, and ripping movies you own is illegal.

    frozonici actually think this is good, you can compared to a AT&T contract, the give you a "cheap" phone and then they tie you to a 2 years investment on that phone, you end up paying (in case of an iPhone 4S - 16GB) the other 500$ that cost the actual phone + the services of AT&T.... this is something like that, i am sure that the price in this contract will be "low" (75$ for a 1TB HDD instead of 100$ like it is right know) so.... that will asure the company a "profit" (based on demand and offer right know wich is pretty good for them, every one wants a HDD but theres only a limited amount) and the extra money they will need to repair the factories


    that's kind of what I was thinking. Getting the money upfront for the factory repairs, and passing the expense on to the OEM, you know, the people who already get hard drives cheaper than we do.

    dimarInstead of rebuilding the flooded HDD factories, they should completely phase-out / discontinue all HDD production, and build cutting-edge SSD facilities!!!


    and even if they did that SSD prices would not come down because the base cost of parts. mass manufacturing is not going to fix that.

    ---------------------------------------

    when so many people here think there's a huge hard drive conspiracy.

    Flood where the manufacturers were
    they jack the prices up 10% higher than they usually are
    retail jack prices up over 100%
    retail screwed us not the manufacturers
    Warranties are being cut most likely because of damaged equipment, you can see this in the warranties where they say anything shipped after this date isn't covered by the warranty they don't mention why after this date they mention shipped after this date.
    I'm assuming witnessing the warranties again at least one submit manufacturing plants are at 100%, you most likely not missing about the current lines of hard drives anymore.
    [/quote]
  • 2 Hide
    silver565 , December 29, 2011 4:11 AM
    Why would a PC Vendor sign something like that?

    It's the manufacturers fault for putting all their factories in the same place with no disaster recovery options of backup factories around the world. People should pay for their poor planning why?
  • 5 Hide
    tlmck , December 29, 2011 4:11 AM
    frozonicwont happen.... average people care more about the amount of storage they have rather than their speed.


    Most "average" people I know have no clue what a hard drive thingy is.
  • 2 Hide
    silver565 , December 29, 2011 4:13 AM
    *or backup factories
  • 2 Hide
    teleman56 , December 29, 2011 4:16 AM
    The last things vendors need is to sign agreements knowing full well that prices are currently inflated 75-100% above value. Vendors know full well they cannot afford the continued higher costs that would be incurred with such agreements as well as knowing that when manufacturing plants return to capacity supply will necessitate a return to the old pricing structure.An agreement of this sort would hurt pc makers is lower sales, period.

    As it is, quality of the 1TB+ drives is abismal and that the qaultiy has to improve and the manufacturers know this by reducing their warranty
  • 0 Hide
    wenqi , December 29, 2011 4:41 AM
    jhansonxiI'm sure SSD manufacturers are not at all upset about this development.

    i have a feeling when that day arrives the shopkeeper will say: "2TB? thats nothing"
  • 1 Hide
    alidan , December 29, 2011 6:26 AM
    teleman56The last things vendors need is to sign agreements knowing full well that prices are currently inflated 75-100% above value. Vendors know full well they cannot afford the continued higher costs that would be incurred with such agreements as well as knowing that when manufacturing plants return to capacity supply will necessitate a return to the old pricing structure.An agreement of this sort would hurt pc makers is lower sales, period.As it is, quality of the 1TB+ drives is abismal and that the qaultiy has to improve and the manufacturers know this by reducing their warranty


    they're actually inflated about 20% at most at wholesale. retail is were getting screwed
  • -2 Hide
    teodoreh , December 29, 2011 9:16 AM
    Plan attack:

    a. Build some factories to a place that floods every freaking year and wait for a big flood.
    b. Create panic to the market and manage prices to be raised up to 150% of your product.
    c. Reduce the warrantly of your products from 5 years to 3 and from 3 years to 1.
    d. Blackmail OEMs to buy with 1 year contract, so as to sell big stock in huge prices.

    Those floods are the last desperate attempt of Seagate and WD to make profit. SSDs will finish you, you freaking arrogant dinosaurs. And btw, good job with the payed article on Tom's Hardware!
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