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Beyond any doubt Thailand floods have affected HDD market. However, some analysts say that the effect on the market should be a 10-30% price increase. Meanwhile in the consumer market the increase is 150-300%.

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source: Idealo

There are claims that this is in fact caused more by big distributors creating false shortage by excessive stockpiling, rather than only the effect of the floods.

Example of such claim:

According to Sander van Veen, storage product manager at Samsung, this increased production cost of Samsung HDDs by 7 to 8 percent. Samsung could not pass that up, because there were already agreements with distributors.

Despite this, the retail prices of Samsung HDDs, as well as those of other manufacturers such as Seagate and Western Digital, increased enormously.

Is there evidence to prove or deny that claim?

Update: yet another claim, few months later. "HDD Crisis Was Fake: Seagate and Western Digital Post Big Profits"

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    I've personally lived through half a dozen of these spikes. Hard drive prices run widely up and down, and looking at a two month period tells you nothing. – dmckee Dec 1 '11 at 16:36
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    What is the method of price fixing being touted? I do not think this question can resonably be addressed in the negative with out that piece. – Chad Dec 1 '11 at 17:41
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    Lookit, they start the y-axis at 40 to make the situation look much worse. Makes me almost disbelieve the text around the figure by reflex. – Jonas Dec 1 '11 at 18:38
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    @Chad: Plotting this in log scale would make the difference very small. Also, since the y-axis starts at zero, it appears that the prices rise about 15-fold, rather than about 3-fold. While the absolute difference is correctly displayed, the relative difference is greatly overstated, most likely as a means to make the case appear more dramatic than it actually is. – Jonas Dec 2 '11 at 2:17
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    @Oddthinking: might as well be interpreted, that in this case stockpiling is intended to created false shortage. Ok, it's not exactly same thing as price fixing, will change the question. – vartec Dec 2 '11 at 9:19
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It turns out that the spike may be because warranties lengths are to be reduced by two major manufacturers in the future.

The current (i.e. expensive) drives have a significantly longer warranty period than future ones from the beginning of 2012.

Seagate's warranties on certain drives will be reduced as of Dec. 31, and WD will follow beginning Jan. 2. All drives shipped prior to those dates will continue to carry the current warranty term associated with the products.

So the OP may be right: These drives will likely command a premium over those with the 1 year warranty after first of the year.

"When we moved to a three-year warranty, the expense of doing that was phone calls, repair rates, return rates, refurbishments. None of that has really changed," Rutledge says. "What has changed is the average selling price. Back then, the average price was $175. Today, our average selling price is $65 to $75."

Source

So while this does not actually answer the question of why it definitely gives motive to horde hard drives with longer warranties that can be expected to command premium prices as over time people will expect that the shorter warranty period will imply low quality product. (Second source(pay walled) that backs up the claim of warranty inferring quality)

  • Anecodottally I know from being in the Industry (I used to recover data from failed hard drives) That moves like these usually leak to vendors and supplier before the populace. Any link to back up that it happened here would be appreciated as then we can show opportunity. – Chad Dec 19 '11 at 19:08
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    I'm no economist, but this seems a long bow to draw - it seems to me it should result in lower prices next year, but (a) could it really drive a huge demand this year, and (b) could an extra few years of warranty (on identical hardware) really account for any more than a few percent of the purchase price? – Oddthinking Dec 19 '11 at 22:01
  • Not sure how this could apply in Europe, given that 2yrs is minimum required by the law: wak-tt.com/tt/2yearwarranty1.htm – vartec Dec 20 '11 at 9:36
  • @Oddthinking - I included links to research that shows that a longer warranty infers a high quality product. And yes people will pay premium for higher quality products... and as the standard is now 66-80% of the old standards that's quite a drop in perceived quality. – Chad Dec 20 '11 at 14:25
  • @vartec - well it gives them reason to horde the drives being manufactured now with the old warranty. These drives will command a premium over the drives made after Jan 1. A temporary spike is risky this is a permanent change creating a finite supply of the old drives that are in demand. – Chad Dec 20 '11 at 14:29

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