DCG warns channel about HDD shortages
Computer association concerned shortages will unsettle the components channel
The Dubai Computer Group (DCG) has warned its members and the broader channel to be careful when ordering hard disk drives (HDD) to avoid over stuffing the market.
The caution comes as shortages of HDD begin to take its toll on the components and system builder channel after months of flooding in Thailand forced factories to shut down thereby affecting 40% of the global hard disk drive supply.
The warning comes as the Dubai-based computer body has moved to help its members mitigate risks and any challenges they may encounter as HDD shortages begin to have a knock on effect on components, notebook and PC sales in the Middle East region.
Shailendra Rughwani, president of DCG said the group is warning and appealing to all the different segments of the Dubai channel to work together in preventing excess inventory clogging the market when supply of HDD returns to normal levels. "We are aware that some IT traders in the local channel are holding on to stock because they are unsure how soon this situation will be corrected," he noted.
Rughwani said the association is also aware that the HDD shortages have created a knock on effect as prices on the drives have gone up more than 50% leading to prices of finished goods (notebooks and desktop PCs) to equally shoot up. "Everyone involved in the components supply chain has had to adjust their prices and we are concerned that this will affect the levels of business in the fourth quarter," he said.
He explained that the shortages will not only affect consumers, but the system builder channel will be severely affected as sales of motherboards, memory modules and processors are expected to slow down as well. This, Rughwani said, will lead to some weaker, smaller resellers to have difficulties surviving in the market. "At the moment, smaller orders of HDD are being met by resellers in Dubai. However, any bulk orders are not being honoured, as most companies are holding on to their existing inventory and are unsure when the market will return to normalcy," he said.
According to a report by analyst firm iSuppli, which tracks the HDD market, the reduction of drives will result in supply/demand imbalance in Q4 2011 and first half of 2012.
"The HDD shortage will affect smaller PC vendors and lower priced products most, including mini-notebooks (netbooks), emerging markets and entry-level consumer PCs. However, even the largest vendors are expected to face HDD shortages, particularly for portable PCs where the market is more consolidated," added Loren Loverde, programme vice president, IDC Worldwide Consumer Device Trackers.
Rughwani agrees and said: "As DCG, we are more concerned about the smaller PC assemblers and system builders because any miscalculation on their part could lead to a disastrous outcome that could have a ripple effect on the entire channel," he said.
He added that although it's still murky as to when exactly supply of drives will return to normal levels, any prolonged shortages will adversely affect the channel's well-being in the Middle East region.