How will the disk shortage affect you?

How will the disk shortage affect you?

Summary: Massive flooding has shut down disk giant Western Digital's Thai plant. Asustek could run out of disks by the end of this month; Lenovo and Apple have issued warnings. That's just the tip of the iceberg.

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TOPICS: Hardware, Storage
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We heard a similar story with the Japan earthquake/tsunami/meltdown disaster: plants offline; component shortages; widespread disruptions forecast. But somehow things have kept going for most vendors with the exception of Lexus, Toyota and Honda.

What's real There's 4 feet of water in the WD plant. Even after the flood waters recede a substantial clean up is required: one analyst forecast 56 days of downtime.

That plant produces about half of WDs disks. WD produces about half of the world's disks, so worst case we're looking at a 25-30% reduction in global disk supply over the next 2-3 months.

Global production is ≈50 million drives a month, so the shortfall could be 30-50 million drives. Yeah, that would hurt.

Components? Disk component suppliers have also been affected, but there's less visibility into their condition. Worst-case so far: the vendor who makes most of the world's spindle motors has a flooded plant.

But shortages of other critical components are possible, and could affect all vendors, not just WD. OTOH, other plants could ramp up to fill the void - and it would be in their financial interest to do so.

The Storage Bits take A few takeaways:

  • No raw drive deals for 4-6 months. Your best bet for deals on capacity will be drives that are in external cases.
  • Smaller drive sizes will be scarce. Available components will go into the newest and most profitable products first - not smaller capacity drives.
  • PC shipments will be affected. You'll have more luck with systems that were already in inventory, not systems with the latest and greatest.
  • SSDs are a wild card. Will vendors go for volume or margins? If the latter there could be some good deals this holiday season and especially come February-March as inventory is replenished.
  • Apple could be hurt. Apple's volume is much smaller, and with their increasing move into SSDs they have less bargaining power than Dell or Lenovo.

Large buyers, like HP, still have power with vendors. Asus may have problems getting drives, but if there are drives to be had, HP will get them.

SSDs don't have the faintest hope of replacing disks en masse, but disk vendors know that price is their big advantage. That will limit the upside pricing changes to vendors. The issue bigger issue will be rationing, not price gouging.

The dynamic to watch is how this affects how drive vendors allocate product to their in-house storage systems operations. This is a high-growth business for margin-hungry drive vendors.

Seagate and WD both have healthy, growing and more-profitable-than-raw-drives SOHO/SMB storage businesses. Given a choice between shipping a 10% gross margin drive to Asus or a 25% GM subsystem, which will they prefer?

Comments welcome, of course. Thanks to global warming we need to get used to these kinds of problems - especially flooding.

Topics: Hardware, Storage

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56 comments
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  • tried to order too late

    Not at all to downplay the suffering of the people directly affected by the flood, but I was one day late in ordering a 500GB 2.5" drive on Amazon. It was in my cart at $65 one day, and the next jumped to $130. So I'll make due until manufacturing starts back up.
    maltomeal3
    • agreed

      @maltomeal3

      Yeah, prices have already started rising substanstially for drives. I just got done replacing a failed hard drive for a friend in his laptop. Nothing special - just basic 2.5" 250GB SATA drive - but the best price I could find for one from a reputable dealer was $65. Only a month or so ago, that drive would have retailed for about $40.

      I told my friend, "Sorry, but you computer picked a bad time to die...", and went on with the repair.
      NetAdmin1178
    • RE: How will the disk shortage affect you?

      @maltomeal3 - How do you know prices will go back down? Any time soon?

      If ever?

      Kept high for long enough, people will forget. After all, gas prices are going down, but food prices aren't following the same "economic laws"... and people are more likely going to see gas prices consciously than food prices...

      Also, what happened to "globalization"? Why did these companies put all of their eggs in just one region? Seemed to be very myopic and greedy on their part, presuming nothing would happen...
      HypnoToad72
      • RE: How will the disk shortage affect you?

        @HypnoToad72 Possibly, if other manufacturers raise their production capacity before WD can get back to full capacity, there will be increased competition in the marketplace, pricing wars may bring prices back down to "normal" levels fast. But it all depends on the competition in this case.

        This can become especially true if too many smaller vendors or a large vendor switches to a competitor for their drives.
        avatoin
      • @HypnoToad72 .. you're right

        ... it was greed that saw many companies move to South East Asia for manufacturing .. well, that and the fact they could exploit workers in sweat shops: thus letting us have, available, cheaper than otherwise possible, hardware.<br><br>The down side for this artificial reason for hiking prices is eventually it will have the affect of coming back to haunt the vendors in the long run. For starters, you can't inflate prices unfeasibly in a chronically depressed market and expect people to pay the hiked price for their (WD's) misfortune and bad manufacturing redundancy plans (... what plans you ask?) and expect to make a killing.<br><br>As usual, because of this, the public have to pay for corporate stupidity and lack of foresight. I don't know about you, but i'm pretty sure people wont be lining up around the block (in a hugely depressed market) to buy overpriced HDD's. It's most likely the majority (not including business / enterprise) will just try to manage the storage they have until prices equalize again.<br><br>As for me, i won't be propping up Western Digital (buying their goods) for their pathetic lack of contingency plans for something like this natural disaster. Commercial buyers obviously will have little choice when storage demands dictate they need more capacity.
        thx-1138_
  • Now is not the time to be finding bargains on hard disks

    Just priced out a terabyte hard disk and it's up over 100% from what I paid last year.
    ye
    • RE: How will the disk shortage affect you?

      @ye - three days ago I bought a 2TB HDD for $150.

      Deals are there.

      It just seems online retailers are taking early advantage of things, and not letting existing stock sell at prices according to the time they were made.
      HypnoToad72
      • RE: How will the disk shortage affect you?

        @HypnoToad72 I bought a 2 TB drive for $99 two months ago, so the $150 you paid represents a price hike. Of course, it depends on the drive, the speed and other factors, but a couple months ago I could find a 2 TB, 7200 rpm, bare drive for $99 - $125.
      • RE: How will the disk shortage affect you?

        @HypnoToad72 Stuff is never sold at prices according to the time it was made. If a shortage occurs, prices of stock already made goes up because it is now in short supply. Think gasoline already in the tanks of gas stations when a storm knocks out a refinery. Price goes up instantly, no waiting til new stock comes it. Why? Supply and demand. BY the same token, if a seller buys at a higher price while the refinery is offline and later the capacity loosens up and competitors lower prices, the seller must do so as well and looses money. It all evens out.
        JoeFoerster
  • RE: How will the disk shortage affect you?

    Just bought components to build a brand new computer. The cost of a 1TB HDD was ridiculous.
    Aerowind
  • RE: How will the disk shortage affect you?

    These prices are crazy. A 500GB WD Blue is now 140$ at Newegg. Insane!
    Bates_
    • It's not insane, it's economics.

      Supply is low, demand is high, prices rise.
      baggins_z
    • RE: How will the disk shortage affect you?

      I got lucky 2 weeks ago with a 10am Sunday morning run to Office Depot. Built 4 new systems by stripping 3TB drives from Western Digital externals for $130 each. 2 new orders this week, they have 200GB used drives from a local recycle shop. IOU stickers attached with free migration when supply returns. Customers understand.
      Programmer1028
  • Definitely Agree!

    My RAID 1 C drive failed at home... I ordered a 1TB disk for GBP 50. That was 2 or 3 weeks ago... Still waiting! Amazon says the delivery should be before 25th of Dec and the disk is no longer available through their online shop... I saw the same disk at another vendor for GBP 100. My guess is they will cancel my order at some point :-(
    Drakkhen
    • RE: How will the disk shortage affect you?

      And in the meantime I could buy a cheap USB 1TB drive for GBP 75. The article is right: far easier to get cheaper external drive than RAW ones!
      Drakkhen
      • RE: How will the disk shortage affect you?

        @Drakkhen
        Correct! And before you drive yourself crazy looking for a raw drive bargain, check out SSDs: do you *really* need all those gigabytes, when for a little more you can get SSD performance?
        R Harris
      • RE: How will the disk shortage affect you?

        @R Harris

        For a lot of people, the answer is YES! I personally need a big hard drive for backups and for storage of my movie collection (all ripped from LEGAL discs).

        Of course, since that drive gets startlingly little usage, it will last near forever.
        Lerianis10
      • RE: How will the disk shortage affect you?

        @Drakkhen - amazingly, and - again at least for brick'n'mortar stores - their prices have not gone up.

        Yet.

        If the innards are stock SATA2 drives, then there's no problem.

        Yet.

        And, as R Harris said, maybe now is the time to go SSD. At least for OS volumes. For data, especially those in graphic arts, film, etc, mechanical HDDs are still the only cost-effective solution.
        HypnoToad72
    • Serves You Right For Buying A &quot;C&quot; Drive ...

      ... instead of an "A" or "B" drive.
      ldo17
      • RE: How will the disk shortage affect you?

        @ldo17 I hope you were trying to be funny, by "C" drive the poster means the boot drive, "A" and "B" drives are for floppies while in windows.
        Clayman1000x