Floods in Thailand that hit in mid-October have had a serious effect on the supply of hard drives across the globe. Western Digital (one of the largest hard drive distributors in the world) announced their December revenues will be at least 60% lower than a year ago, due to their concentration of supply chain factories in flooded areas. The flooded areas are estimated to be responsible for nearly 70% of the world’s demand for hard drives.
Even for companies who don’t make their hard drives in Thailand (like Seagate), the flooding is impacting their availability too, since many of the components they use are manufactured in Thailand. These supply chain problems are expected to last into and throughout 2012, making the cost of hard drives go up, and making availability limited.
"There are occasions of 180 percent price increases as compared to before the flood," said Tom Coughlin of Coughlin Associates, which tracks the storage industry.
Many one terabyte internal drives, for example, are now priced at $120 and up. These would have been $60 to $80 before the flood, Coughlin said. "Prices (before the flood) were as low as 4 cents a gigabyte, now we're seeing 12 cents. That's a 3X increase," he said.
So what does this mean hard drive shortage mean for the typical small- or mid-sized business?
You can expect server and PC shipments to be delayed, and should expect to see price increases, especially for basic workstations that use less than 500GB hard drives. On Dell’s most recent earnings conference call, their CFO Brian Gladden stated: “It’s clearly going to be a complex situation that plays out over the next few quarters, given the fact that there will be shortages”. We’ve already seen typically lead times for Dell Optiplex workstations and some PowerEdge servers in the 3-6 week range.
Of course, since there is a supply chain problem, there’s not much we can do. However, now is a great time to spend time with your management team, including your IT staff (or consultant), to plan for 2012. If you have plans to replace or add workstations in 2012, it probably makes sense to shift those purchases a month or two early, to ensure you leave enough time. Server purchases are going to be even more important to plan carefully as servers typically have a longer lead-time under normal circumstances.
Finally, this could be a good time to evaluate a cloud solution that eliminates the need to replace existing server hardware. From hosted email to hosted application servers, cloud services may be able to provide much of the functionality you rely on today with your in-house servers.
For more information on Skoda Minotti's Cleveland IT services, cloud solutions or the expected hard drive shortage, please leave a message below or call 440-449-6800.