October 15, 2008

Converge Storage Update

3.5" Drives
Some analysts are reporting that inventory levels for the 3.5" storage drive segment are at a seven- to eight-year high and expect things to remain this way through the end of 2008. The result is that excess inventory is pushing pricing sharply downward. HDDs in the 80 GB to 250 GB range are experiencing the greatest decline, with only $2 to $3 separating open market resale pricing for each capacity. In spite of the excess inventory and price erosion, we are still tracking volume sales for IDE HDDs in this range. Meanwhile, pricing for the 400 GB capacity and higher have stabilized somewhat month over month. However, sales volumes are much lighter for this capacity range as compared to the lower capacities. This is especially true in the IDE interface.

2.5" Drives
The 2.5" market is not experiencing the same excess levels as the 3.5" market. As a result, open market pricing for the 20 GB through 80 GB IDE HDDs decreased by only $1 to $2 month over month. Demand remains steady in this range and interface. Meanwhile, sales volumes for the 2.5" SATA market remain light. We are tracking very few speculative buys at any price. There has been an increase in spot market demand for specific part numbers, including WD1200BEVS, WD1600BEVS and MK1234GSX. The 7200 RPM drive in the SATA interface continues to fetch a premium.

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