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HDDs still in demand, prices soar

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DQW Bureau
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The constant fluctuation in hard disk drive (HDD) prices and shortage of supply seems to be giving the players in the local IT hardware business a tough time. They are having a run for their money while competing with each other to clinch deals and this compounds to their existing woes of poor sales, low margins and heavy competition. The local IT market which has lately been witnessing constant price changes in HDD prices has this week touched an all time high. Moreover, availability of products (20 GB HDDs) seems to be causing some worry to traders because they are losing their business to those making a fast buck out of their old stock reserves.

It is important to note here that `the DQ week Madras' had carried a report in issue dated 30 July-4 August 2001 about the sudden demand in the availability of hard disk drive products and the subsequent increase in prices. The story also hinted about the phasing out of 20 GB hard disk drives from the market and making 40 GB the entry-level product.

"It is true that there is a problem from July-end and the price of the product has dropped marginally during August-end and September. But, now, again the prices started going up and is back to its earlier pricing of Rs 4,500/Rs 4,600, in the last few days," said KP Harnath, Marketing Manager, Universal Microsystems.

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Presently, Seagate 20 GB hard disk drive is priced between Rs 4,500 to Rs 4,650, while Samsung (20 GB) price varies from Rs 4,200 to Rs 4,350 (based on the market quotes at the time of filing this story). Meantime, the price of 40 GB hard disk drive is steadily crashing. A couple of months ago, a 40 GB drive was priced Rs 6,000 and above, and today, it is available for around Rs 5,000. "All this clearly shows that 40 GB is going to become entry-level soon, we eXPect further price cuts in 40 GB almost equaling the present cost of 20 GB (by then 20 GB would be phased out from the market)," said R Radha, Senior Marketing Coordinator, SES Technologies Limited.

While price fluctuations are accepted as the norm of the day by a major section of channel people, some of them deny the shortage issue saying that the shortage is limited only to Seagate products (20 GB drives). "We don't see any short supply in Samsung products but in the case of Seagate, it is true," said Ashok Chandan, CEO, RM Computers.

The local IT market has given varied reasons for the price fluctuations such as irregularities in supply, phasing out of 20 GB drives and more importantly dollar-rupee fluctuations where rupee is losing value constantly against dollar. "The prices go up between the time of booking orders and making payments, which make importers feel the burden and they in turn end up increasing the price of product in the local market," said

Harnath.

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"The prices of 20 GB drives may go up even further in the coming days," said R Shivakumar, CEO, S3 Computers.


"We are having a tough time in pleasing customers and making them accept 40 GB drives. Moreover, if we supply computers with 20 GB drives, we will have to face warranty issues with the buyers when 20 GB is phased out from the market," said S Samkumar, General Manager, Elite Peripherals Limited.

According to a leading distributor who claimed anonymity, "Seagate products are technically sound when compared to its competitors and people who care for quality still prefer Seagate although it comes with only one year warranty. In some cases however customers prefer Samsung for its three-year warranty assurance."

Market sources say that Seagate will soon stop producing 20 GB drives and make 40 GB the entry-level at a much lower price than what it is available today.

Today, the local IT market is facing challenging times, what with being plagued with demand and price fluctuations coupled with an overall dull business scenario. And against this backdrop, traders admit that while it is easier to convince end-users, when it comes to assemblers/ system integrators, they have a tough time.

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