PC Component prices after Budget 2012

Sujeet said:

Was waiting for HDD prices to drop but no point in it now....read that it will remain hi up for this complete year.

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BlueFin Research analyst Paul Peterson asserts in a note this morning that the supply imbalance in hard drives that was triggered by last year’s flooding in Thailand is not as dire as originally feared, which is good news for PC manufacturers that had been struggling to buy enough drives at reasonable cost. One contributing factor, he notes, is that PC demand remains sluggish. Seasonally slow demand is allowing a rapid recovery in HDD inventories, he asserts.

The BlueFun analyst says he finds that some HDD suppliers have received orders that are much higher than reasonable production levels would warrant, “suggesting that orders have been inflated to ensure sufficient supply. These suppliers are now starting to get concerned about the stability of these orders, sensing a decreased sense of urgency from the HDD OEMs.”

He adds that if the supply imbalance does correct faster than anticipated, component suppliers would be far more likely to feel the backlash than an outright glut of HDDs, due to the severe inventory depletion of drives at the outset of the crisis. But he adds that pricing trends could reverse if supply recovers sooner than anticipated – and that could ding financial results and share prices at Western Digital an Seagate if that happens.

“With the industry now sitting at three large diversified suppliers, the hope is that there will be less likelihood of aggressive price or production moves to upset the balance of supply/demand, and inevitably pricing,” he writes. “But suppliers are being tasked with component orders which would be far in excess of reasonable demand forecasts, according to our research. Add to this the potential for overproduction from the integration of the WDC and Hitachi GST operations, with each company essentially acting as separate entities for a period of two years. And not only is PC demand waning, consumer electronic devices integrating HDDs are also depressed. Game console and DVR growth is being depressed by the economic malaise, as well as the improved gaming experience on smartphones and tablets, and the fact that these devices are lasting longer in homes than previous generations. Apple’s decision to stop integration of HDDs into Classic iPods was another blow to the CE space for HDDs.”

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RiGOD said:

Will there be considerable changes (hike/drop) in pc hardware prices based on the current budget?

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