How Will Thailand’s Floods Affect the Hosting Business?

 
As you may know Thailand has been ravaged with flooding throughout September and October. What you may not know, is much of the worlds hard drives are manufactured in Thailand. The monsoons have barely let up and as it stands many of the biggest names in hard drive production are very much feeling the effects. Western Digital and Seagate both have a considerable amount of factories underwater and their ability to produce drives has grinded to a hault.
 
Suppliers like Newegg.com have limited the amount of hard drives you can buy to 1. You read correct, you can only buy 1 hard drive from NewEgg right now. To make matters worse, that 1 drive you are able to buy will cost you TWICE the normal price you paid just 1 week ago. For instance, a 500GB Sata drive which normally retails for $40-$50 is currently selling for $99-$120 today. A 600GB SAS drive which sold for $350 last week is now going for $575. Huge server providers like Dell and Supermicro are no better off. Currently both Dell and Supermicro will only sell a Hdd if you buy an entire system along with it. So if I only need 20 x 600GB SAS drives, I will need to buy 20 chassis, 20 boards and memory as well. That takes what is normally a $7000 purchase up to a $20,000+ purchase.
 
Luckily, Hivelocity was aware of the situation well before last week when things started to go crazy and we stocked up on everything we need. As it stands we have at least a couple of months worth of surplus drives in our stock room. If other hosts were not made aware of the situation in advance they will be struggling to find hard drives for one, and they will be paying an arm and a leg for the drives they are able to acquire. It would not surprise me if we see an uptick in pricing by some hosts over the next few months.
 
Opinions vary and the extent of the damages these floods will continue to have is still unknown. Yesterday PC World told us not to worry about it only to publish an article today that says maybe we should worry about it. From my research most in the know seem to think there will be shortages of hard drives for at least the next 2-3 months with many saying the computer world will be feeling the effects for another 6 months.
 
Pricing of hard drives increased at a general rate of 15% per day last week. The good news is pricing from yesterday to today is unchanged. We can only hope that pricing does not increase further and Western Digital and Seagate are able to increase production from their Chinese plants to offset Thailand.
 
One more thing to look out for is an increase in offerings of Solid State Drives by hosts. SSD are not mass produced in Thailand and these drives are so far unaffected by the situation. As it stands, SSD are readily available and pricing has not changed. Of course, the folks who do manufacture SSD are very aware of the situation and you better believe that if they see demand for SSD go up they will take advantage and raise pricing as well.
 
All we can do is wait and see what happens and hope that the floods soon recede and Thailand gets back to normal. In today’s global economy, a flood on the other side of the world can have profound affects on how things operate everywhere. Hivelocity has plenty of drives so we invite you to buy as many servers with as many drives as you want!