Hard drive shortage leaves dealers in a quandary

Hard drive prices is expected to double in the Indian open market and is likely to affect the PC business for both partners and vendors.

The impact is already visible in the assembled PC business, and branded PCs to get affected shortly as two major Indian players; Western Digital and Seagate, have increased the prices globally due to the floods in Thailand. Majority of the production plants have shut down affecting the hard drive market globally.

According to iSuppli, a component research agency, Seagate and Western Digital accounts for two-third of the total shipment of hard drives globally. In India too, these two hard drive manufacturers dominate the market.

World-wide Western Digital (WD) said in a press release that the company ships 60% of its hard drive units from Thailand and the flood in the company's supply chain division is likely to have a significant impact on the company's overall operations and its ability to meet customer demand for its products in the December quarter. WD was not available for a comment on the impact in India.

On the contrary, Seagate has other plants in Malaysia, Singapore and China operational, but the impact was unknown as Rajesh Khurana, country manager, Seagate, India and Saarc, officially declined to comment anything on this issue. While the distributors observed a little impact though unclear about the future business. Manoj Gupta, MD, Fortune Marketing, one of the leading distributors of hard drives said, "Till now, the Indian picture is is not very clear as Seagate hard drives are also shipped from its production plants outside Thailand. But the impact is evident and the vendors does not commit on any of its functionality."

Recently, weakening of rupee has pushed major vendors to hike IT products in India; further escalating the problem for dealers, hard drive crisis comes in picture . Locally assembled desktop business is expected to slow down due to the current shortage.

Mitesh A Jain, proprietor, RT Computers and Services, Hubli, said, "Since it was a festive season, many dealers in the market absorbed the price hike of hard drives, but none would be able to retain it further. Already due to strengthening of dollar prices, assembled desktop market is impacted. Sooner it will affect assembled PC market. After the festive season, sales of branded laptops or desktops vs assembled desktops was in the ratio of 4:1."

He further added, "A Seagate hard drive of a certain confi guration which used to cost Rs 1,800 is now costing Rs 3,850. The hard drive market will take some time to come back to its normal price." Another partner from Bengaluru, Mahendra Baid, owner, Mega Compuworld shared similar thoughts. He said, "Already the market is running 60-65% short of supply and therefore the prices are high. After re-correction of prices vendors are likely to increase it by 100%. In a period of 10- 15 days the whole hard drive market has turned upside down."

Vendors have also started to realize the impact of the exceptional situation.

Acer, a significant PC maker in India also seems to get impacted. S Rajendran, chief marketing officer, Acer, raised sentiments about the situation, "Unfortunately this is a very unprecedented situation and there is no respite. Supply chain is badly affected. In the open market, the impact is already seen in terms of short supply as well as high prices."

He further added, "There is no big inventory in the market as of now and vendors will start seeing the impact by mid- November. Definitely Acer would increase the price but now I am unable to gauge the extent of it."

On the other hand LG's market also seemed disrupted. Sanjoy Bhattacharya, marketing head, product group, IT business, LG said, "LG mainly operates with regional distributors and there is a very thin line of stock. The prices have been going upwards since the rupee depreciation and will continues due to current hard drive problem. It will also impact shorty on our PC business, as there will be an increase of around Rs 2,000- Rs 2500." He also added, "In international markets the effect is low as there is supply of hard drives but in India there is a shortage as well as hike in prices. One of the reasons is that few businesses practice unethical trade and therefore this is an artificially created shortage in the open market."

DISTRIBUTORS HOLDING THE HARD DRIVES
After the hard drive price upsurge, dealers across South are accusing the distributors for the unethical business practiced by them. Speaking to The DQ Week, John G Kotara, State PRO, All Kerala IT Dealers Association(AKIDTA) said, "Business is really going bad as distributors are holding up the stocks. They imported large number of hard drives and now they are marketing it. Basically they are tampering the older prices and selling it in hiked rates."

Dealers in Kerala said that they are willing to pay the price after Thailand problem but the distributors shouldn't cheat upon them. The dealers are ready to give higher prices if the distributors produce current MRPs products.

Pointing out similar problems, Toshy Mathews, President, AKIDTA-Ernakulam District said, "As we know, due to Thailand calamity, hard drive prices have increased. We firmly believe that sub-distributors and distributors have stocked up the goods and currently working in tandem to sell on a higher price. AKIDTA has also called upon a meeting to discuss the problem and send intimates to the vendor companies."

Disagreeing to the accusation one of the managers in Redington, a source on the basis of anonymity said, " The prices are high but I completely refuse the allegations put by the dealers. We cannot stock the goods in a very short period of time and therefore there is no question of tampering. It suddenly seems to be the case of misinformation."