Hard Drive Prices: Think Globally, Pay Locally

While the consumer electronics industry is bracing for a bleak holiday with lower sales on everything from HDTVs to video game consoles. Normally this would benefit U.S. consumers, thanks to holiday-season deals.

But all bets are off this year, due to flooding half way around the world in Thailand. Until the natural disaster hit, most analysts predicted sales on everything electronic this coming holiday season.

So how is it that a flood half away around the world could be a Grinch that stole Christmas?

Most eletronic devices, whether it is a portable music player, GPS device, camcorders, or basically any product that uses a hard drive is going to see a jump in price, possibly up to 10 percent. This of course includes computers, which have seen a major decline in sales, and a price jump isn’t going to help that market at all.

So how did this happen? It all comes down to the fact that a single facility in Bang Pa-In, owned and operated by Western Digital, produces one quarter of the world’s supply of “sliders” -- a crucial part used in the production of hard drives. With the lower floors of the factory under water, and the loading dock resembling a boat dock, production is at a standstill.

I previously noted in a feature titled that “(A disaster) can destroy lives and livelihoods in an instant, and it can leave survivors with a long and difficult road to recovery.” In this case a major disaster has struck a major firm and it is being felt around the world.

The good news in this – if you can call it good news – is that Seagate, which is also located in Thailand, hasn't been affected by the flooding and probably won't be. According to a story in The New York Times, in the end Seagate will likely see its profit margin grow from about 20 percent to 30 percent as a result.

All of this just goes to show how connected the world is today, and in the end it still seems that consumers can’t catch a break – or at least not as big a break as they might have hoped.