PC makers vs. hard drive shortages: Q4 likely ok, Q1 a clunker

PC makers vs. hard drive shortages: Q4 likely ok, Q1 a clunker

Summary: Given the hard drive shortages that loom it's likely that retailers and distributors will double-order PCs in the fourth quarter and pay the price in the first quarter.

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TOPICS: Hardware
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PC makers are likely to weather any hard drive shortages in the fourth quarter since they have inventory of supplies as a buffer. The first quarter, however, could be tricky, according to Jefferies.

In a research note previewing Dell and HP earnings Nov. 15 and Nov. 21, respectively, Jefferies analyst Peter Misek outlined the aftershocks from the floods in Thailand. As noted previously, flooding in Thailand has rattled hard drive makers and their suppliers. Western Digital took the biggest hit.

Misek concludes that the fourth quarter for PC makers like Dell and HP should be solid. However, these strong quarters aren't exactly demand driven. Given the hard drive shortages that loom it's likely that retailers and distributors will double-order PCs. Once this double-ordering plays out, an ugly quarter ending April 30 is likely to hit.

Also see: Thailand floods to lead to hard drive shortages for months

In a research note, Misek said:

The Thailand floods disrupted hard drive supply but could counter intuitively help Dell's and HP's January quarter PC business as retailers and distributors clamor for as much supply as possible; however, we believe a significant shortfall could occur in the April quarter once PC and hard drive inventories are depleted.

The catch is that PC makers aren't likely to pass along these increased hard drive costs because demand is weak and the economy is uncertain. Toss in what could be a slowing corporate upgrade cycle, a pause ahead of Windows 8 and economic uncertainty and PC makers aren't in any position to be upbeat about future quarters.

According to Misek, the following scenarios could play out.

  1. Vendors will push higher-end PCs to boost profit margins.
  2. Solid state drives are pushed as an alternative.
  3. Should PC supplies dry up, tablets may be chosen as replacements.
  4. Branded PC makers will fare better than generic box makers.

For the PC buyer, it's unlikely you'll get great deals in the fourth and first quarter. If inventories are tight, vendors aren't going to be in a rush to drain the supply chain.

Topic: Hardware

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  • SSDs, much?

    nt
    goingbust
    • RE: PC makers vs. hard drive shortages: Q4 likely ok, Q1 a clunker

      @goingbust >

      Just invested in my first a Zalman S 128GB. I was sold on the DDR2 128MB cache, but the use of a jmf-616 ARM based controller later became an issue with Windows7 compatibility. I was able to work around the IE9 software issues of freezes and BSOD's by switching to Java and Chrome. Now that everything is peachy online my AMD video drivers probably won't be up to speed until Windows 8 has a couple months on the market; that is if their ARM support will require AMD to evolve its driver foot-print for a desktop intended purpose. I got J-Micron for the recognized reliability from experts, though it only gives my WEI score a 7.2.

      Sandforce 2281 is going backwards from an expert point of view from the sata2 Sandforce 12XX controller's claim of 10,000 deletes, with so many units failing at below half that number. Even expected to fail below 3,000 deletes.

      J-Micron may very well be out of the running with all of the players moving quickly to Sandforce 2281 sataIII 6Gb/s and that is kind of too bad for the market if guys like me have success with their SSD lasting for five years. Hopefully we will get past the SSD craze since it is so volital and have the next big thing coming down the line.
      Zurk_Orkin
  • RE: PC makers vs. hard drive shortages: Q4 likely ok, Q1 a clunker

    Here come SSD's
    MoeFugger