Buy SSD-based laptops now -- before prices jump

In an inevitable knock-on effect from soaring hard drive prices, expect demand for Ultrabooks and SSDs to increase

Depending on how you measure and which markets you scan, the price of hard drives has gone up 25 percent to 200 percent -- or more -- in the past few weeks, thanks to floods in Thailand that have knocked out hard drive manufacturing facilities.

That isn't the worst of it. Supplies are thinning out and laptop manufacturers are publicly predicting they'll have trouble filling their machines with hard drives by the end of the year.

But the manufacturing capacity for SSDs (solid-state drives) has not been affected. If you're in the market for an SSD-based device, such as an Ultrabook laptop, now might be a time to buy -- before demand pushes those prices up, too.

Three weeks ago, I warned that the floods in Thailand would bring hard drive supply shortages and higher prices. Two weeks ago, I raised a red flag about soaring hard drive prices. Now, just as inexorably as the flood waters inundating Bangkok, the wave's going to roll over SSDs.

Why? Laptop manufacturers are caught between a rock and a hard place. They're looking at 500GB 2.5-inch hard drives for $100 to $150 -- twice as much as they cost a month ago -- if they can find them in quantity. That pushes up their build costs, and retail won't be far behind. Acer, for one, has announced it's raising prices on laptops in mid-November.

The price points are moving quickly. Already in the sales doldrums, netbooks are getting tarred with the same hard drive price increases. But since Ultrabooks typically use SSDs or combinations of lower-capacity SSDs and small hard drives, their prices aren't as susceptible to hard drive roller-coaster rides. Intel has been pushing Ultrabook manufacturers to lower their costs so that they're more competitive with laptops and netbooks. Now it looks like increases in hard drive prices will take on some of the heavy lifting -- in the other direction.

Meanwhile, back in Thailand, the hard drive production situation looks muddy. Last week Seagate -- which didn't have any production facilities in flooded areas -- said it expected to ship 41 to 45 million hard drives this quarter, compared to 48.9 million in the fourth quarter of last year. It also says it could end the year with the capacity to produce 60 million drives per quarter, if component shipments pick up. Seagate expects demand in the quarter will hit 180 million units, but anticipates that worldwide supply will only reach 110 to 120 million.

Western Digital, on the other hand, hasn't issued any official numbers since shortly after the flood hit -- almost a month ago. Analysts estimate that Western Digital could turn out 22 to 26 million units this quarter, primarily from its plants in Malaysia and China. But the company hasn't hung its hat recently on any specific numbers: a potential wild card at this point.

Nimble component companies are striking back. Nidec, which makes hard drive motor components in one of its flooded Thai plants, has one plant back onstream as of Nov. 4. Smaller component manufacturers, such as Eng Teknologi and Dufu Technology, both based in Malaysia, have quickly moved production to Malaysia, China, and the Phillipines.

Unless Western Digital has a major surprise in store, demand for hard drives should stay high through the end of this year and well into the first quarter -- quite possibly even into the second quarter of next year.

Even though SSDs remain substantially more expensive than HDDs -- nobody expects IT departments to put 1TB of SSD memory in newly issued computers -- increased laptop (and netbook) prices are going to cause many buyers to look at Ultrabooks and SSD alternatives. If you expect to be in that group, it would behoove you to start looking now.

This story, "Buy SSD-based laptops now -- before prices jump," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.

Copyright © 2011 IDG Communications, Inc.

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