Hard drive pricing is still high internationally, following flooding in Thailand that was described as the world’s fourth costliest natural disaster by the Work Bank.

Local pricing has followed the international trend and remains far higher than pre-flood levels in September 2011.

Causes of high pricing

The main reason for higher than normal hard drive pricing is the flooding Thailand experienced in September 2011. Thailand is responsible for half of the worlds hard drive production, both in the form of component production and product assembly.

Manufacturer Western Digital were hard hit by the flooding, with one of their plants submerged in water until mid-November. Component production in this particular factory only resumed in late November.

Toshiba also suspended production at various Thailand-based factories, while Seagate, who source components from Thai based companies, faced component shortages.

Rand devaluation against the Dollar also played a part in higher hard drive pricing since September 2011. The exchange rate for the beginning of September sat at R7.03 to the dollar. This skyrocketed to a peak of R8.52 in late November, before dropping slightly to current levels of around R7.55 per dollar.

Craig Brunsden, Executive Director at AxizWorkgroup notes that the flooding created knock-on effects that have also influenced pricing.

Brunsden said that the effects were worsened by “traders/speculators and big players buying up available supply and making the shortage worse by artificially holding supply off the market, in the expectation that money will be made in the short term. Thus, the actual effect of the supply is made worse by the aftermarket issues.”

Continued effect on pricing

Issues that led to the spike in hard drive pricing continue to have an effect on the local market according to Mahomed Cassim, CEO of local hardware distributor Esquire.

Cassim noted that the price of hard disk prices had at times escalated by almost 200 percent since late last year. This is having a “marked affect” on the sales of desktop PCs and notebooks as resellers and end-users remain unwilling to pay the current price.

Brunsden from AxizWorkgroup also commented on the consumer side of things, saying that consumer demand wasn’t really affected. “Most of the demand issues happened in the supply side rather than the [consumer] demand side, where distributors and traders were buying up any available stock,” said Brunsden.

He continued by noting that while consumer choice may have been affected, PC availability hasn’t. “Local South African brands and certainly component distributors have been affected, and thus a consumer’s choice of brand may have been affected, but PC’s have been available throughout the shortages.”

How long can we expect hard drive pricing to remain high?

Brunsden noted that hard drive pricing is already reducing as supply continues to improve even though the situation is not quite back to normal yet.

“Forecasts are that the situation will be back to normal by mid-year,” Brunsden concluded.

Cassim echoed Brunsdens comments about continual price reduction, though he noted prices are still high. “Although the marketplace is starting to see price reductions across the board, disk drives are still about 60-90% more expensive than they were before the flooding,” concluded Cassim.

Article courtesy of MyBroadband – Hard drive pricing still high in SA