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Hard drive prices unlikely to fall for 18 months

Hard drive prices to remain relatively high for the next 18 months or so despite production levels returning to normal.

The price of hard disk drives (HDD) for consumers is unlikely to fall to the levels experienced at the beginning of last year for another 18 months, according to industry analysts.

IHS iSuppli's report explained that the calamitous Thailand floods that occurred during October caused hard drive prices to soar because a number of key factories owned by Western Digital, as well as other technology companies, were badly damaged.

The IHS iSuppli Memory and Storage Market Brief report indicated how the average global selling price for hard drives was $51 (£33) in the third quarter of 2011, before rising 28 per cent to $66 (£42) in the fourth quarter immediately after the flood. There was also a 29 per cent drop in shipments in the fourth quarter.

Hard drive production is returning back to normal and is expected recover completely by the third quarter of 2012. Shipments rose by 168 per cent to 145 million in the first quarter and another ten per cent to 159 million during quarter two.

By quarter three shipments are expected to reach 176 million, exceeding the pre-disaster levels of 173 million for the first time.

Yet, prices are still set to remain high for the time being.

Fang Zhang, analyst for storage systems at IHS, explained how there is much more pricing power in the market now than in 2011 due to recent mergers.

“With the two mega-mergers between Seagate/Samsung and Western Digital/Hitachi GST, the two top suppliers held 85 percent of HDD market share in the first quarter 2012," he said.

"This was up from 62 percent in the third quarter of 2011, before the mergers. The concentration of market share has resulted in an oligarchy where the top players can control pricing."

As a result, consumers are unlikely to get a hold of a good 1TB hard drive for less than £100, and even the cheapest ones are around 25 per cent more expensive than they were at their lowest cost.ADNFCR-1220-ID-801381926-ADNFCR