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HDD Makers Want Long-Term Contracts With PC Vendors

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.

  • "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!
    Reply
  • Gin Fushicho
    Geez... anything to make extra money huh?
    Reply
  • alikum
    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.
    Reply
  • sixdegree
    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.
    Reply
  • HDD manufactures need to pad their revenue numbers to make the shareholders happy.
    Reply
  • drwho1
    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.

    Reply
  • 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.
    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?
    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.
    Reply
  • kyuuketsuki
    Damn, Tom's, you *STILL* really need a freaking edit function.
    Reply
  • jhansonxi
    I'm sure SSD manufacturers are not at all upset about this development. :D
    Reply
  • elbert
    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.
    Reply