Hard Drive Prices skyrocket due to Thailand floods

Due to the flooding in Thailand, hard drive prices have doubled and tripled on Newegg, Ebay and Amazon in the last few weeks. Western Digital and Toshiba have shut down operations in Thailand. Seagate is in slightly better shape with production facilities spared from flooding. But major component suppliers which supply parts such as spindle motors, head ramps and chips to all of the hard drive manufacturers are still underwater.

Prices are expected to climb further and hold steady for at least the first two quarters of 2012.

The outlook is anything but rosy for Seagate boss Stephen Luczo, who last week warned that drive supply issues will continue throughout 2012. Today Goldman Sachs cut earnings-per-share estimates for Intel based on the severity of the flooding.

But resellers feeding these warnings through to end users are being confronted with cynicism.

"Customers don't fully realize how much trouble the disk drive issues will cause, they think we are pushing end-of-year deals. But the industry has gone from PC glut to shortages in two months so the attitude is understandable," said one.

Another large dealer agreed: "We are advising customers to buy now rather than next year because prices will continue to rise, but they don't believe us. The industry has done a really bad job of communicating the issues in Thailand."

If you think about it, the repercussions are going to be all across the computer industry and beyond. From businesses cutting back on PC refresh projects, holding on to and stretching the life of older PC's and servers, to big PC sellers such as Dell and HP cutting sales forecasts of new PC's 25% to 40% in 2012.

Hosting companies, company data centers, search engine servers, telecommunication companies, audio/video production houses, government computer systems - all of them rely on massive storage pools consisting of millions of hard drives. Hard drives are mechanical and failures are a common event.

It's hard to comprehend just how massive the impact will be going forward with availability of hard drives dwindling in the coming months.

It may take longer to recover then first thought.

I purchased additional hard drives (16TB worth) to keep my computers and servers going throughout 2012 before the prices went through the roof. Hopefully I don't have any major drive failures, but you never know.