A VP at Hitachi's disk unit - soon to be part of Western Digital - says that disk supplies won't return to normal until the end of 2012. He expects disk inventories to approach zero by the end of March.
The problem is that supplies of disk components are still short, and the smaller companies that make them aren't recovering quickly.
The Storage Bits take
No doubt this is largely true and not just competitive posturing designed to drive up margins for the next quarter or two. But in an environment where these smaller companies can sell everything they can make - for decent margins - it is hard to believe that suppliers won't bounce back before July.
We may not reach the normal state of drive oversupply until the end of the year, but I'd be very surprised if monthly volumes are not close to normal in June. Refilling the channel will take a couple of months, and OEMs may want to over-invest in disk inventory just to be safe - more rains in November?
Price declines will be slower than the production ramp would suggest, because vendors at all levels will be getting higher margins. So if you don't need that drive, hold off for a few months.
The wild cards in the supply/demand equation are:
- Ultrabook uptake. I'm not convinced that Ultrabooks will be successful - Wintel buyers mostly want cheap, not good, or they'd buy an MBA - but their use of SSDs and flat overall PC volumes will curb overall disk demand.
- SSD vendor aggression. SSD vendors may be tempted to take advantage of higher disk prices by cutting margins to drive share. It is much easier to build SSDs than disks right now.
Despite the 50% rise in disk prices over the last few months, disks remain a terrific bargain. There is no cheaper storage you can buy.
The industry's risk is that more people will realize that they don't need a 1TB notebook drive, make the move to a much smaller SSD, and never come back.
Comments welcome, of course. Readers, why do you think more people don't know how much storage they need and buy accordingly?