The flood waters are receding and manufacturers are bringing factories back online, but the major HDD distributors haven’t issued much new guidance as far as when they expect to be fully operational again. The big news this past week came from Intel, which lowered its guidance on Q4 results by a billion dollars as a result of the HDD shortage.
AMD, however, claims to see no such problem. Speaking to MarketWatch, AMD CEO Rory Read stated that HDD supplies were “going pretty well” and that “in 1Q and 2Q, maybe you see some manifestations [of shortages,] but I wouldn’t bet against the supply chain. They’re very resilient.” Investment group Nomura also claims that Intel’s problems are bigger than the hard drive shortage, writing “we think weak sell-through is also contributing to the $1 billion shortfall. We see softness in China, continued demand for ARM-based more power-efficient devices, and low volumes for ultrabooks.”
AMD’s lack of trouble (assuming Read was being honest) may have more to do with the preparedness of the company’s primary vendors than any obfuscation on Intel’s part. As for Nomura’s claims, Intel’s ultrabook push is still in its infancy, the company has set an aggressive target for next year’s sales, but has made no claims about 2011. ARM chips aren’t replacing Intel chips in notebooks, and tablets aren’t eating into notebook sales.
So what is going on in the HDD market? Not much, though there’s a major short-term caveat to that statement. Here’s what prices look like.
The Samsung Spinpoint F3 (in red above) is currently $149 at Newegg, but the site is offering $40 offwith the use of promotion code EMCJHJE29. That brings the 1TB down to $109, and while that’s still nearly twice the price such drives were going for this past fall, it’s much cheaper than any other option we’ve seen in months. This deal expires on December 21, so if you plan to use it you’d best do so quickly.
Aside from the Spinpoint deal, prices have generally held steady. The 2TB Caviar Black is back down to $249 after rising as high as $279 just before Thanksgiving. Seagate’s 1TB Barracuda has fallen to $129, while the other drives haven’t budged. The Hitachi Touro Desk Pro saw a modest price increase up to $129, but the external USB 3.0 2TB drive remains a much better deal than any of its internal counterparts.
We’ve supplemented our previous chart with a graph to show how current prices compare with historical levels. The VelociRaptor 600GB and Hitachi Touro Desk Pro are the only two drives whose prices aren’t running at least 50% higher than back in September. At present, analysts continue to predict that drive shipments will impact prices well into 2012 with levels only slowly returning to pre-flood points.
Seagate, Western Digital slash drive warranties
Both Seagate and WD win this year’s “Suspicious Timing” award for drastically slashing HDD warranties in the wake of the Thailand floods. In WD’s case, there’s at least an obvious reason: The company has stated it expects to take at least a $275 million hit against its Q4 results as a result of the flooding. Seagate, however, is the manufacturer least affected by the floods and the one expected to see the greatest revenue gain as a result of the shortages.
There’s also a difference in scope. Western Digital cut warranties on the lower end of its consumer products — Caviar Blue, Green, and Scorpio Blue drives will carry two-year warranties as of January 2, down from three years previously. Warranty lengths on Caviar/Scorpio Black drives and VelociRaptor drives remains at five years.
Seagate, on the other hand, is cutting warranties on its Constellation and Momentus XT families (down to three years, from five). The real slash is aimed at the Barracuda family, where the warranty period will now be just one year (down from five) as of December 31.
Both manufacturers have cut warranties before and hid behind vague explanations when they did it; Seagate currently claims that this move is being made “to be more consistent with those commonly applied throughout the consumer electronics and technology industries.”
The reality is simpler: This is a decision to protect profit margins by cutting down on RMA costs. In Western Digital’s case, it’s at least somewhat understandable. Seagate is further maximizing its already excellent market position by cutting product costs. Both companies deny that the HDD floods have anything to do with this decision.
There’s an alternative, somewhat darker explanation for this behavior. It’s possible that Seagate and WD have slashed warranties because they’re worried about the reliability of the drive components they’re currently using. HDD component manufacturers were also swamped by the flooding; the drive motor company Nidec was particularly affected.
These circumstances created an enormous gray market for HDDs and their constituent parts. It’s absolutely possible that the major drive companies have cut warranties because they’re not as confident in the reliability of their hardware as they would be under normal circumstances.