Storage optimize

Plan now for serious hard drive shortages: Tips to reduce risk

Recent natural disasters have caused major flooding in Thailand, resulting in a hard drive shortage. Rick Vanover shares some tips to help mitigate exposure to the supply chain interruption.

If you haven’t noticed yet, there will be a serious issue in the availability of hard drives. This is because of the major flooding that has occurred in Thailand. While this natural disaster is incredibly unfortunate for the people of Thailand, we also will see the supply chain impacted significantly for hard drives and other subcomponents. Some ship dates at one of the largest server and storage brands in the US now list estimated ship dates after March of 2012.

In terms of news, one report puts production offline for the rest of 2011 and a statement from Seagate confirms that supplies will be short of expected demand. I had a chance to check with a few storage companies to get their perspective on this event, and there is a consensus that the impact will be significant. Drew Meyer, senior director of product marketing at NETGEAR told me that they have an inventory to go through the current quarter (Q4) of 2011. However, immediately, pricing for drives has increased as much as 70% in the last two weeks. Sourcing drives independently may become attractive to NETGEAR customers, as the ReadyNAS series of disk product have diskless options that allow the customer to source drives on their own if they choose and can purchase outside of the price fluctuations.

ioSafe, makers of ruggedized storage devices, had similar commentary. Robb Moore, CEO of ioSafe confirmed that this will have a widespread ripple effect in the industry. Moore further went on to say that some external hard drive manufacturers will have to exit the market entirely. Storage is a widespread market of systems with high margins as well as low-end solutions with rock-bottom margins; yet, they may use the same commodity disks underneath it all. Moore goes on to predict that higher-end (which command higher sales margins) systems will likely be less impacted by the supply shortage compared to external drive systems. Like NETGEAR, ioSafe has an inventory to cover the immediate future for their storage products.

I take particular interest in this situation as I spent the majority of my career working for a supply chain execution solutions company. I’m quite familiar with how the supply chain works, and I can confirm that it is very efficient. And what that means is that if there is an interruption in the network, the gap can be felt immediately. This is because inventory sitting on a shelf doesn’t really make any money. I’ve worked on projects at multimillion distribution centers and had process engineers watching every motion with a stopwatch and calculator to ensure the efficiency targets are met. The problem here is an assumption of a constant inbound stream of product. In the case of the hard drive situation, we are likely facing a serious interruption to how the drives (both rotational and solid state) are manufactured and components are sourced.

What can the typical administrator do? I posed the question just this year on whether parts on the shelf are a good idea or not. While people are split, it’s pretty clear that a large stash of drives to satisfy months and months of disk consumption isn’t practical. One or two miscellaneous parts here and there have a much more clear case. This is a great time to reduce our storage consumption. This can be via deleting old data, moving it to a storage cloud, leveraging deduplication, virtualizing, consolidating resources or simply revisiting retention policies.

While I don’t think this supply chain issue will cause significant issues like server and storage companies unable to execute warranties, I do think net new purchase price will go up sharply. Do you have any strategies to prepare for this potentially tumultuous event? Share your comments below.

About

Rick Vanover is a software strategy specialist for Veeam Software, based in Columbus, Ohio. Rick has years of IT experience and focuses on virtualization, Windows-based server administration, and system hardware.

22 comments
masharubudiu
masharubudiu

This is just my two cents - might not mean much ;-) We're being moved to the cloud. By any means necessary - remember 'someone' is making money AND the cloud needs drives which 'someone' WILL pay for at rates that are guaranteed to be free of fluctuation (something everyone seems to have forgotten) I'm a Kenyan, living in Kenya and enjoy following TT whenever I can.

Kostaghus
Kostaghus

I believe it was around 2002-2003 or something like that when there was an earthquake in Taiwan and HK. They said that would mark a huge jump in RAM costs since most of the plants were affected. The raise lasted for about 2 months and it amounted to around 10% of the price. Then there was a decrease as everybody jumped on the "quick bucks with RAM" bandwagon. It'll be the same now!

urgrdianangl
urgrdianangl

There going to use the insurance money to re tool for SSD's right? Because i'm still waiting for the price drop.......

Tony_Scarpelli
Tony_Scarpelli

Most of the shortage is from speculators and people who instantly need a spare drive since they heard there is a shortage. This is the wrong time to stock up. There will be a big price decrease in about 120 days so you will waste your time and money and aggravate the problem. Its like someone yells fire so people stampede getting out of the theater. Or all in a sudden everyone needs to fill the auto's with gas, so instead of everyone driving with half of tank, they all start driving with full tank and the shortage is actually created by human fear. If you do not need a drive today, do not buy one. I am in the break fix business, if a client needs a drive I will tell him the prices, secure a drive and mark it up my normal margin. It won't hurt me at all.

bmxcrs
bmxcrs

I order drives for our repair business for 24 years . All the other drive manufacturing company's are just taking advantage of the cituation. WD has two locations also. This has been going on for years w mem, pcb,s now hdd's. From what i was told. The other Drive Manuf doubled there prices because of the opportunity. It's a great money maker for them. Just be glad there not oil cooled.

john.ammon
john.ammon

Companies have adopted two practices that make them extremely vulnerable to these natural disasters. Just in Time Inventory and Sole Source (or All the eggs in one basket) manufacturing. Now Just in Time Inventory is not going to change (e.g. go back to warehouses full of inventory) because of the chance of getting stuck with too much inventory as products change faster then ever before. But you can easily have two companies in two geographical diverse regions manufacture the same product. Then when Asia gets hit with a disaster, your manufacturer in South America or Europe steps up production with a second or third shift to try and cover the production shortage from the disaster site. See Foxconn problems affecting Apple's inventory for a good example. Image if your competators were forced to double or triple their prices because of supply shortages and you were able to keep your orignal price.

davezor
davezor

This is not surprising and is bound to happen more often in less developed countries that lack infrastructure and the ability to respond to natural disasters. Maybe instead of building these facilities in the most eco-laxed and labor cheap areas of the world companies will start looking at the bigger picture and use some common sense in choosing where to manufacture their products.

KNOWLEDGE464
KNOWLEDGE464

The SSD era has arrived and what better than a natural disaster to get its presence felt... I can feel the force here and I can see that SSD will probable if they were smart drop their price by 20% and they will take over the world ....

richard.artes
richard.artes

My colleage ordered a Western Digital hard drive a few weeks ago, it cost 119 euro. Now the price is 329 euro. That's more than double the price. Get stockpiling now!!!

SkyWlf77
SkyWlf77

"While this natural disaster is incredibly unfortunate for the people of Thailand[...]" Really?!? That's it? All they get is "it's unfortunate"? Seriously, I often wonder how some journalists, and even people in industry, are able to sleep with themselves at night. Floods are incredibly devastating and those in Thailand are no exception. Over 400 people have lost their lives and 1/5 of Bangkok, Thailand is now underwater (Harvey, 2011). Is this really such a small issue to you that "it's unfortunate" really covers it? It's not all about you, or even all about us. It's this type of corporate disinterest that has led us to the economical depression we are currently in. Come on now... -Jason Harvey, R. (2011). Bangkok continues to battle Thailand floods. Retrieved November 5, 2011 from http://www.bbc.co.uk/news/world-asia-15587901

LostValley
LostValley

There MUST be a way to engineer shortage of government.

b4real
b4real

And we recovered, but IIRC, it took 3-4 years for RAM to get "cheap" again. We'll see in this situation.

footprintless
footprintless

The "disaster" in Thailand is man-made. Sure, the water is "natural" but it was the intentional management of the billions of cubic meters of water that created the current situation, including hard disc shortages. Why would Thailand's super rich do this to their country? US$30 billion in "recovery" programs. Plus it instantly yanked all attention away from the puppet PM's fugitive billionaire brother. And it wiped out millions of Thailand's independent farmers, putting primary control of the country's food production, processing and distribution in the hands of super corporation CP. It is not beyond belief that the Thai government also got a handsome payment to divert the water that has enabled the obscene profits being made from currently skyrocketing HD prices. Or maybe the water management payment came from "some maker in China". Look deeper, guys. We are being herded. And the average Thai is paying the highest price for the national and global profits of man-made shortages and speculation.

Dzmitry Z
Dzmitry Z

What you're proposing is already happening. Motorola Mobility Holdings, Samsung Electronics, and Foxconn are building factories in Brazil to produce tablets there. Foxconn is the biggest of the bunch with some folks estimating the deal at $12 billion. The Foxconn factory near "Steve Jobs" road is rumored by Brazilian media to already be producing iPhones and is expected to start churning out iPad tablets by December for sale to Brazil's growing middle class. The company, whose main listed vehicle is Hon Hai Precision Industry Co Ltd, has already hired more than 1,000 people in Jundiai, a medium-sized city an hour away from Sao Paulo, to work at a new plant.

mbrown
mbrown

During Y2K planning in the late 90's, most major companies with supply chain concerns (e.g., Nike) made a point of getting supplies from geographically diverse areas for this very reason. In fact, our Y2K code outsourcing was spread over multiple countries, instead of just India like we had done in the past, for this very reason...and we are back to the old habits already? I suppose everyone is back to coding two digit years as well!

knura
knura

Natural disasters can occur anywhere in the world, when it happens it does not discriminate. Recall the New Orleans, LA, USA flooding and the mess that followed, and earlier this year the effects of Tsunami on Japan to cite a few examples of natural disasters in the "First World"

b4real
b4real

Because I'm worried about the enclosures and busses, which are the same for rotational storage from a supply chain perspective.

Kostaghus
Kostaghus

Obi Wan has taught you well! But you are not a Jedi yet... The SSD still has some issues to solve. One of them would be the limited number of read-write cycles.

seth.priddis
seth.priddis

I haven't check them out much but I have seen some SSD prices go up along with the hard drive prices. SSD makers are probably going to cash in on this because of the demand.

b4real
b4real

I'm talking about supply chains and impact on our data security. So I didn't focus on the disaster that is impacting many people in Thailand. It is not that I have no regard for that, it is that I don't have access to that information.

b4real
b4real

I've got to believe there is some maker in China. I fully expect I've never heard of it, however.

b4real
b4real

With presumably unchanged supply