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Hard drive prices won't drop until 2014

Production levels recover but demand will keep prices high

Hard drive prices will not fall to a pre-disaster level until 2014, according to a report.

IHS iSuppli has made the statement despite stating that production is rapidly recovering after the floods in Thailand. The firm said that apart from the dramatic affect the flooding had, prices will remain inflated due to high demand. See also: Group test: what's the best portable hard drive?

Fang Zhang, analyst for storage systems at IHS said: "HDD manufacturers now have greater pricing power than they did in 2011, allowing them to keep ASPs (average selling prices) steady,"

IHS said that the inflated price of hard drives caused by the flooding last year will remain due to the projected popularity and growth of cloud storage, social networking, PCs and laptops like Ultrabooks.

It is also down to original equipment manufacturers (OEMs) signing long-term agreements with hard drive makers which lock the price at about 20 percent higher than pre-flood levels.

"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. 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 and are able to keep ASPs at a relatively high level." added Zhang.

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