Seagate Believes HDD Supply Disruption to Continue in 2012
Seagate estimates 2012 HDD shortage at 150 million units
While the company was able to ship 47 million drives in Q4, the company warned analysts that the damage will result in further shortages. In 2012, the industry will not be able to supply hard drives with a total capacity of about 100 exabytes, Seagate CEO Stephen Luczo said. Based on the average capacity of shipping hard drives today, that translates to about 150 million units, according to the company.
The company noted that seven of Seagate's top 10 suppliers "suffered direct factory damage" and all product platforms "experienced some form of supply interruption." Luczo stressed that "a large portion of the precision machining capability that support the hard drive industry the motors and base decks to actuators and specialty mechanical parts, were catastrophically lost." Still, the production is ramping up again and "over 200 requalifications have occurred for motor base assemblies alone," the executive said. The impact increased the average unit cost for Seagate by $2.50.
At this time, Seagate is somewhat pessimistic that the HDD industry can catch up with demand anytime soon. "We believe the impacts of the flooding are going to be felt well into 2013 in terms of trying to address the needs of customers to acquire storage," Luczo said during the earnings call with analysts.
For Q4, Seagate reported revenues of $3.2 billion and a net income of $563 million.
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Wait, didn't SEAGATE have no shortage because the flood in Thailand did not affect them but they still price gouged their HDDs?
Supply and demand my friend. If they kept the hd prices low, they would have ran out of hard drives in a few weeks.
Wait, didn't SEAGATE have no shortage because the flood in Thailand did not affect them but they still price gouged their HDDs?
lol, first off, just because seagate itselft wasn't directly impacted as much as other companies, its suppliers were, which means it has been affected severely as well. Hard to put together a hard drive when the warehouse is empty.....
2nd, ever heard of supply and demand? supply fell way short of demand very suddenly so of course the price is going to go up, it isn't price gouging, its economics.
And how long will they pretend that they are having a shortage (not saying they aren't right now) because they know that the internet cannot function without a constant supply of drives and they can basically charge whatever they want and people will keep buying them until one of the (few remaining) manufactures decides to undercut the rest? I understand that supply was hurt, but just how honest are they going to be about it when they have an easy chance to recover their loses.
To bad this doesn't help lower SSD prices.
Considering that it is 2012, and there is still a shortage I would say that their prognostications are correct lol
Can't wait for my 2TB drives to get back under $100 each... I'm really hurting for a home server, if only I didn't need 4 of the damn things to do it right.
Wait, didn't SEAGATE have no shortage because the flood in Thailand did not affect them but they still price gouged their HDDs?
they increased it 10% due to them being the only real choice, they were effected though, just had most of their manufacture areas out of the flood
To bad this doesn't help lower SSD prices.
On the contrary, the prices may not have come down much, but the rebates have been killer the last few months. I have no doubt that they are trying to entice buyers with those... just hoping that they forget to turn in the rebates.
And how long will they pretend that they are having a shortage (not saying they aren't right now) because they know that the internet cannot function without a constant supply of drives and they can basically charge whatever they want and people will keep buying them until one of the (few remaining) manufactures decides to undercut the rest? I understand that supply was hurt, but just how honest are they going to be about it when they have an easy chance to recover their loses.
Capitalism and competition will sort this out. A few companies may try and colude to keep prices high but there will be other companies who will sell for the right market price to maximise output and turnover. Thats the beauty of a free market.
The articles that I've read on this make it seem like all the HDD manufacturers are setting themselves up to milk this whole situation for as long as they can. Not that this is a bad strategy, but it's bad news for those of us hoping to buy drives at pre-flood prices sometime soon.
That's interesting because the impact increased the average unit cost for the consumer by over double.
ok Seagate or whatever I wait and look to buy harddrive again by 2013. Cya fools. it all seems that you are are taking ur sweet time to "rebuild" ur factory.
isnt the high price of HDD also slow the demand? I am pretty a lot of people are like me stop buying until it fall back the previous price.
That's a very low profit margin for such a high turn over, is that right?
they increased it 10% due to them being the only real choice, they were effected though, just had most of their manufacture areas out of the flood
Affected
Guess ill finally buy an SSD and bluray burner. Start only using my old HD's for important stuff.
If hard drive prices stay high I won't be buying another hard drive. I can get by on several older drives working together. I am looking to go SSD for my new system too. It would be nice to have a large capacity drive as secondary storage, but I don't see it happening anytime soon with the way the manufacturers are milking the floods. They must have hired some BP or Exxon executives.
Just glad I got my 1TB and 500GB drives just before the prices skyrocketed (paid $49 and $39) -- figure it'll probably take 6 months to a year to get the prices back down and then since they were able to milk it for so long there will be some other major catastrophe that shoots them up again -- Just like Oil prices every travel season.
Well, the hard drive prices had been coming down into reasonable price for the last couple of years at least. So, they did not make enough money and need to make up for lost time?
Seagate hard drives are manufactured in China (no flood zone). To my best understanding, it was Western Digital that had production in Thailand.
If they needed to up the price a bit, ok. I will pay extra for a good quality hard drive with no problem. But, 3x the price and less warranty (from what I hear)? I don't thinkso.
HOLD UP~! WAAAIT A MINUTE ~!!!
What part of "The impact.." that caused an "...increased {of} the average unit cost for Seagate.." a freakin "..$2.50." equal a 150% increase in price on some drives on the street? Don't get me wrong I am sorry for the floods and wish the people that live there and work for a living speedy recovery. But when a Seagate CEO has the "Winchesters" to say per unit price is up by 2.50 and the street price is much much higher I begin to wonder what kind of fool they take us for ? Do I expect an increase in price due to natural disaster ? Yes I do... but the cost don't justify the means. (byte me!)
On the contrary, the prices may not have come down much, but the rebates have been killer the last few months. I have no doubt that they are trying to entice buyers with those... just hoping that they forget to turn in the rebates.
I turn in the rebates and forget to follow up after they don't arrive. Stopped buying products with rebates because of it.
Take a look at this then u know that u all are getting rip off. There is no such thing as selling lesser HDD while getting more profit than b4.
http://www.xbitlabs.com/news/stora [...] ments.html
Capitalism and competition will sort this out. A few companies may try and colude to keep prices high but there will be other companies who will sell for the right market price to maximise output and turnover. Thats the beauty of a free market.
what do you mean "other companies"? you mean Western Digital?
capitalism will keep prices high, shareholders first before consumer welfare.
To bad this doesn't help lower SSD prices.
Soon enough my friend. Soon enough.
* Seagate's and WD's suppliers, plants, equipment, inventory and lost sales were insured.
They got fat checks for their losses minus depreciation on equipment. They charged a few dollars more per unit, hence the fat profits.
-But how in the world do we go from a 60 to 70 dollar 1TB HDD to over 200 in November, and now around 150 bucks for 1TB, if Seagate is only charging 2 to 3 dollars more per unit??? Wholesalers? Distributors? Retailers?
http://guru3d.com/news/seagate-see [...] ly-crisis/
Seagate is laughing
Considering that it is 2012, and there is still a shortage I would say that their prognostications are correct lolCan't wait for my 2TB drives to get back under $100 each... I'm really hurting for a home server, if only I didn't need 4 of the damn things to do it right.
WD 2TB hard drives were $70 before this happened.
I personally will wait until all this nonsense is over, and then probably wait some more for the 5TB hard drives to be around $100 each, then get at least 6 of them for my tower.
Then I want to move my current 6 2TB drives into a NAS.
http://guru3d.com/news/seagate-see [...] ly-crisis/Seagate is laughing
Because they manufactured the HDD's for the same cost as pre-flood prices. But since WD can't make demand, people have to buy more Seagates. Seagate doesn't have enough drives to make up for WD's shortcoming, so the price goes up. Meanwhile, it still cost them the same to produce, but they can sell at higher margins because of the market.
It's a win for Seagate.
Then on the other side of the fence. WD's costs to produce went up. Way up. In a vacuum, their prices would be higher than they are now, but they can't charge anymore because Seagate can afford to price their units lower. Hence they decline in profit.
Economics is a beautiful thing.
If there was a HDD manufacturer that wasn't impacted at all by the flood, they would've seen their profits at least double.
No Consumer wins with an Oligopoly. Mergers suck and we all get screwed, the 'flood' was all the fuel needed.
I said last year in the forum and to TH/BoM that my expectations of prices to stay high through 2012 then, I was right. So my crystal ball also predicts a slow return to 'acceptable' prices even though 2013, but no $60~$65 1TB HDD's for a long time.
Maybe the high prices will spark investors into new start-up's, and maybe they'll have enough foresight to avoid: earthquake, flood, coastlines, volcanoes, hurricane/typhoon -- zones, or other risky sites.
That's funny, because I just read the linked article yesterday that state Q1 demand for HDD's is historically low. http://channelnomics.com/2012/01/2 [...] g-subside/
Really?
...
Then why does a 2Tb drive that used to cost me £50 now cost over £100? Supply chain shouldn't be compounding the additonal cost and if they do it is blatant profiteering.
I just hope I don't have a drive failure in the next six month at least. Replacement costs are brutal. And I'm extremely wary of the external-drive-product offerings, the refurb offerings, and the low-capacity new-product offerings. How old is a 250 GB, 3.5" drive, anyway? What's the MTBF on a refurb? And what will I find when I crack open an external drive product like a WD Passport or whatever?
@mhughes81: of COURSE demand is low... for 1 TB drives at $160 each! We slid up on the price curve, and down on the demand curve as a result.