Hard Drive Prices To Remain High Until 2014: Report

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Prices have fallen somewhat from their peaks, in some cases significantly thanks to the lower need for brokers, Nor-Tech's Swank said.

"Immediately after the floods, there was dire speculation that the hard drive production volumes would not return in 2013," Swank said. "So everyone started buying up stock. Then they realized that supplies are available, and they were sitting on overpriced drives. Seagate and Western Digital have dropped prices somewhat, but not anywhere near pre-flood pricing."

For the foreseeable future, there is no real alternative to traditional spinning hard drives, Swank said. SSDs are still expensive even though their price-per-capacity points is falling, and despite the fact that new form factor systems are increasingly looking to SSDs as a primary storage device.

"New form factors like Ultrabooks are an opportunity for the SSD industry," he said. "And new Ivy Bridge solutions for a new line of tiny PCs could push demand for SSDs. But there's still a huge need for hard drives. I recently heard Seagate's CEO saying that just the growth of data alone exceeds the capacity of all SSDs being sold."

IHS iSuppli's Zhang also said that another reason for continuing prices is the fact that several PC OEMs in the second quarter signed long-term agreements with the hard drive vendors that provided pricing guarantees but locked them into pricing about 20 percent higher than pre-flood levels.

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