Hard drive shortage hurts Intel, but Apple is the 'least impacted'
While chipmaker Intel has said a lingering hard drive shortage will affect its fourth-quarter results, the issue is not expected to have a negative effect on Apple's Mac sales.
Intel's results are expected to be below the company's previous projections due to the continued shortage of hard drive supply. The chipmaker lowered its fourth quarter revenue to $13.7 billion, down from $14.7 billion.
Analyst Ben Reitzes with Barclays Capital said Intel's revisions should not be a surprise to those who watch the PC market. But while major PC makers like HP and Dell expect to be negatively impacted by the hard drive shortage, Reitzes said he believes Apple will not be hurt by hard drive supply constraints.
"We think Apple will be the least impacted of our PC coverage names, if at all, given its ability to sell MacBook Airs and iPads," he wrote in a note to investors.
In what may have been the first sign of the hard drive shortage affecting Apple, earlier this month build-to-order iMacs with 2-terabyte hard drives saw their estimated shipping times slip to 5 to 7 weeks, significantly longer than their previous shipping estimate of 1 to 3 days. Those shipping times improved last week to 2 to 4 weeks, suggesting supply of the high-capacity 2-terabyte hard drive has improved.
Apple Chief Executive Tim Cook was asked in October about the hard drive shortage, which is a result of flooding in Thailand. At the time, he was unsure how the situation might affect Apple.
"It is something I'm concerned about," Cook said. "We do expect -- I'm virtually certain there will be an overall industry shortage of disk drives as a result of the disaster. How it affects Apple, I'm not sure."
About 14,000 factories were shut down by the floods in Thailand, putting more than 600,000 people out of work. Among the companies affected by the natural disaster were hard drive makers Western Digital and Seagate.
Intel's results are expected to be below the company's previous projections due to the continued shortage of hard drive supply. The chipmaker lowered its fourth quarter revenue to $13.7 billion, down from $14.7 billion.
Analyst Ben Reitzes with Barclays Capital said Intel's revisions should not be a surprise to those who watch the PC market. But while major PC makers like HP and Dell expect to be negatively impacted by the hard drive shortage, Reitzes said he believes Apple will not be hurt by hard drive supply constraints.
"We think Apple will be the least impacted of our PC coverage names, if at all, given its ability to sell MacBook Airs and iPads," he wrote in a note to investors.
In what may have been the first sign of the hard drive shortage affecting Apple, earlier this month build-to-order iMacs with 2-terabyte hard drives saw their estimated shipping times slip to 5 to 7 weeks, significantly longer than their previous shipping estimate of 1 to 3 days. Those shipping times improved last week to 2 to 4 weeks, suggesting supply of the high-capacity 2-terabyte hard drive has improved.
Apple Chief Executive Tim Cook was asked in October about the hard drive shortage, which is a result of flooding in Thailand. At the time, he was unsure how the situation might affect Apple.
"It is something I'm concerned about," Cook said. "We do expect -- I'm virtually certain there will be an overall industry shortage of disk drives as a result of the disaster. How it affects Apple, I'm not sure."
About 14,000 factories were shut down by the floods in Thailand, putting more than 600,000 people out of work. Among the companies affected by the natural disaster were hard drive makers Western Digital and Seagate.
Comments
And what about unit sales or stock levels? I know lots of companies have just in time supply chains. but maybe Apple already had some qty on a truck before the constraint occurred.
I hope this pushes flash drive prices even lower. It's 2012, Flash storage should be a standard.
Extremely sad about the flooding in Thailand.
But yes, flash storage is just another transistorized microcircuit. Thus Moore's law applies to flash storage: "...the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years." At some point flash drives will be cheap enough to replace all internal hard drives. And external hard drives will be so big that you won't need very many. Just one 1 petabyte drive per household for wireless backups, and another 1 petabyte drive to back that one up. Done.
Apple shocked the industry by not including a floppy drive on the original iMac.
They shocked the industry by not including an optical drive in the MacBook Air.
They'll shock the industry again in a few years by eliminating hard disk drives from all Macs.
Assuming Apple had good long-term supply contracts in place with Hitachi, Toshiba, and Seagate, I can see how it would not be affected much. The Thailand issues should be resolved in 3 to 6 months anyway. WDC has already said that they will restart production earlier than expected.
At some point flash drives will be cheap enough to replace all internal hard drives.
Flash drives may soon replace hard drives because people don't need such big drives on portable devices, but not because they become as cheap as hard drives. I bought a 3TB hard drive in April for $150, which is $.05/GB. The cheapest flash drives are about $1/GB, which is 20 times more expensive per byte. Of course, ten years ago flash was 100 times as expensive as disk.
Extremely sad about the flooding in Thailand.
But yes, flash storage is just another transistorized microcircuit. Thus Moore's law applies to flash storage: "...the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years." At some point flash drives will be cheap enough to replace all internal hard drives. And external hard drives will be so big that you won't need very many. Just one 1 petabyte drive per household for wireless backups, and another 1 petabyte drive to back that one up. Done.
Don't forget that hard drives have their own law, Kryder's Law, which is roughly equivalent in magnitude to Moore's law.
Less impact on Apple because Apple just doesn't sell that many PC's with hard drives. Simple math. Besides, Apple is more of a phone hardware company.
All but two of their models come with hard drives standard.
That's being generous and counting the 11" and 13" MacBook Air as separate computers.
Flash drives may soon replace hard drives because people don't need such big drives on portable devices, but not because they become as cheap as hard drives. I bought a 3TB hard drive in April for $150, which is $.05/GB. The cheapest flash drives are about $1/GB, which is 20 times more expensive per byte. Of course, ten years ago flash was 100 times as expensive as disk.
Didn't what you say in red just totally contradict what you said in blue?
I realize that by the time flash memory prices catch up to magnetic storage prices, magnetic storage will be even better value-wise, but considering consumer's needs I would think almost all consumer electronics will be flash memory by 3-5 years from now, including laptops.
This page has a nice trendline for hard drive capacity. I would like to find a similar chart for flash.
About 14,000 factories were shut down by the floods in Thailand, putting more than 600,000 people out of work. Among the companies affected by the natural disaster were hard drive makers Western Digital and Seagate.
To me, that's the most surprising thing of this entire issue. 14,000 factories shut down? Plus all the ones that remained operational? Just how many factories do you need to make hard drives? Didn't anyone ever hear of economies of scale?
All but two of their models come with hard drives standard.
That's being generous and counting the 11" and 13" MacBook Air as separate computers.
Think of it as a percentage of their revenues, though.
Apple by far makes the most money from iPhones.
They seem to sell a ridiculous amount of Macbook Airs, too, and of course iPod touches.
It also doesn't seem as if laptop drives are affected quite as badly. If you look on Newegg for 500GB drives 2.5" are actually cheaper than 3.5" by $10.
So that only leaves the Mac Pro as being significantly affected...and that thing is so low volume and overprices every part so much it shouldn't affect Apple at all.
I hope this pushes flash drive prices even lower. It's 2012, Flash storage should be a standard.
Nope, you're wrong, and I can't believe you would make a statement like this. My 500 GB hard drive was $80 a few years ago (and due to the hard drive shortage, it's $80 now).
My 64GB SSD was $111. The 512GB version of my SSD is $800. Do the math man, flash shouldn't be standard.
Now if you're saying that computers should come with a small boot and application SSD (like what I use my 64 GB SSD FOR) in addition to a large magnetic disk, then you are closer to making sense.
But in reality, most people can wait the extra split seconds in order to be able to fit a decent amount of data on their $400 laptops.
Also, how would a shortage of magnetic storage push SSD prices lower? Wouldn't more people be turning to SSDs and therefore demand for those would spike during a magnetic storage shortage like this one?
So that only leaves the Mac Pro as being significantly affected...and that thing is so low volume and overprices every part so much it shouldn't affect Apple at all.
You've forgotten the iMac.
Why did they put all the factories in Thailand?
They didn't, but the IT industry loves a shortage. Will be interesting to see the effect on gross margins for Hard Drive vendors with factories outside the affected zone.
To me, that's the most surprising thing of this entire issue. 14,000 factories shut down? Plus all the ones that remained operational? Just how many factories do you need to make hard drives? Didn't anyone ever hear of economies of scale?
I'd be pretty certain that this 14,000 figure relates to all factories for all products not just hard drives
I'd say out of all PC brands Dell is going to be the worst affected by this, given the leanness of their supply chain. However it's going to be an issue for every component supplier, last figure I saw was a 60 million unit shortfall on Hard Drives for Q4. That's a hell of a lot of 'other' components to use up!
To me, that's the most surprising thing of this entire issue. 14,000 factories shut down? Plus all the ones that remained operational? Just how many factories do you need to make hard drives? Didn't anyone ever hear of economies of scale?
If the numbers are correct, and they apply to HDD factories only, there is an averages of 42.85 employees per factory (remains weird to decimal a number when concerning people). Looks like there is no economies of scale. Why would that be? And is Thailand different to other countries?