Q: Is it true that the floods in Thailand are going to make computers more expensive this holiday season or can we still expect good deals?
A: The worst flooding in half a century that hit Thailand and specifically the industrial center of Bangkok in October has had a major impact on many technology driven industries including computer and automobile makers (Honda and Toyota mainly).
The PC component industry’s track record for using natural disasters as an excuse to artificially inflate prices is legendary, but in this case, what you are hearing is true depending upon what you plan to buy.
Most analysts are saying that major PC makers should have enough inventory in the supply chain to get through the holiday season, but expect major shortages in the first quarter of 2012.
Businesses that generally update their technology because budgets open up in the first quarter of the year should keep this in mind when planning major upgrades.
The primary component that’s being impacted by the floods is the all-important hard drive because nearly half of the world’s production comes from the ravaged region.
The aftermarket component market has already seen massive price hikes on stand-alone hard drives and an analyst from Piper Jaffray is warning that “we could run out of drives by the end of November”.
We are already seeing 75 to 100 percent price hikes on certain high-demand hard drives from our suppliers along with limited allocations and expect it to get worse as time goes on. Some of this we assume is the industry taking advantage of the bad news with existing inventory, but it’s been going on long enough that the shortage in supply is kicking in.
Piper Jaffray estimates global demand for hard drives in the fourth quarter of 2011 will be 180 million and that only 100 to 120 million drives will ship.
This means anyone thinking about upgrading their computer with a bigger hard drive or buying an external hard drive for backup can expect to pay as much as an 80 100 percent premium depending upon the size of the drive.
Cutting-edge manufacturers that tend to custom-build their computers with the most current technology are also likely to be impacted by both lack of supply and price increases.
Based on all of the predictions and with no real clear idea from Thailand when they will be back up to full strength, this could be a protracted shortage.
CEO Tim Cook expects the primary impact on Apple to be on Mac computers (both desktop and laptop) as “I’m virtually certain there will be an overall industry shortage of disk drives as a result of the disaster.”
Another disturbing report is that a company called Nidec that is said to supply 70 to 80 percent of the motors used in hard drives manufactured by Seagate, Hitachi, Western Digital and Toshiba will only have a limited supply.
Computer manufacturers typically keep three to four weeks' worth of inventory on hand, but with the down economy and sluggish PC sales, it’s likely that some were carrying less stock, which could shorten the cycle leading to price hikes.
The good news is that the holiday season always brings out the deepest discounts and I wouldn’t expect this year to be any different from what you see advertised.
What I do expect to be different this year is that you will likely hear "we are out of stock on that item" much sooner, especially on advertised items, so plan accordingly!
• Ken Colburn is president of Data Doctors Computer Services and host of the Data Doctors Radio Program, noon Saturdays on KTAR 92.3 FM or at www.datadoctors.com/radio. Readers may send questions to firstname.lastname@example.org.