Feeds

HDD oligopoly to keep post-flood prices high till 2014

Surging demand and vendor lock-in delays return to 2011

Application security programs and practises

Hard disk drive prices are unlikely to return to pre-flood levels until 2014 despite rising production levels, thanks to surging demand, vendor lock-in and a market dominated by just two suppliers, according to analysts.

IHS iSuppli’s latest Memory & Storage Market Brief report revealed that the average selling price (ASP) for the entire HDD market rose 28 per cent, from $51 (£33) in Q3 2011 to $66 (£42) in the fourth quarter.

However, with the floods now a distant memory, production has been getting back on track and will recover completely by the third quarter 2012, the report said.

Shipments are expected to rise by 10 per cent from the previous quarter to 176 million – the first time this year they will have exceeded 2011 levels – but average selling prices will remain little changed, according to the analyst.

Storage systems analyst Fang Zhang said part of the reason for the continued high prices is the current concentration of market share.

“With the two mega-mergers between Seagate/Samsung and Western Digital/Hitachi GST, the two top suppliers held 85 per cent of HDD market share in the first quarter 2012,” he said.

“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.”

A related factor is that an increasing number of OEMs have signed up to long term contracts with said HDD makers, in order to obtain guarantees on shipments. These deals effectively lock them in to prices around 20 per cent higher than pre-flood levels, said iSuppli.

Finally, demand for HDDs continues to soar, inflating prices.

Demand is mainly driven by corporate and consumer-related cloud storage and is predicted to continue later in the year thanks to a surge in PC sales on the back of the launch of Windows 8 and Ivy Bridge Ultrabooks. ®

Eight steps to building an HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.