According to Reuters report from October 28, 2011, prices of hard disk drives have risen by 20-40%, and the effect has prompted major distributors to up their prices by the same margin. Our investigation on pricing at reseller level tells of a different story. Several of our system integrators as well as resellers inform us of ferocious price gouging activity, on all of the drive capacities and manufacturers across the board.

Figure 1: Workers are rescued by their colleagues and rescue workers after floodwater started to break through makeshift barriers erected the past few days at Nawa Nakhon industrial estate on the outskirts of Bangkok, Thailand, Monday, Oct. 17, 2011. (AP Photo/Apichart Weerawong)

Seagate – distributors have raised prices, and according to our sources they have been raising prices everyday last week and many resellers are forced to buy at exorbitantly inflated prices. Our price challenge was based on the 3TB Enterprise drive that is very popular amongst many OEM and NAS system integrators. At the time of this report Friday 28 October 2011, the drive prices from distributor were at an average of $453.00. Prior to the flooding the street pricing was $279.00, clearly depicting a huge price differential. This totally over shadows the information provided to Reuters.

Hitachi – It seems the same rules apply, although Hitachi drives have run dry in the distribution channel according to information we received. We did however under our reseller disguise find a leading Hitachi distributor requesting $341.00 for 3TB Desktop Hitachi drives which until recently had a street price of $169.00, this being clearly far off the mark from the 20-40% price rise reported by many of the leading news agencies.

Western Digital – Follows closely with the Hitachi scenario but with little or no stock now, as these were the fastest to disappear from stock.

It is clear the major distributors are not being monitored by the manufacturers as they seem to have their hands full with other pressing matters, clearly manufacturers will need to launch an investigation into this abysmal practice of price gouging after the dust has settled and really impose penalties or appoint other morally upstanding distributors that do not take advantage of issues pertaining to human tragedy. Clearly these distributors have hit rock bottom in the morality and ethics code of business.

According to Reuters one of the victims of this price gouging tragedy. has been NetGear Inc, which buys hard drives to use in commercial storage devices, in some cases has seen prices charged by distributors more than double from levels before disaster, said Shane Buckley. general manager of NetGear's commercial business.

"Speculators are gouging the market significantly and in some cases making enormous profits out of the people of Thailand's misery," Buckley told Reuters. He declined to say which distributors.

Neighborhood computer repair shops in the United States are also wrestling with scarcity and higher prices for hard drives as lingering inventories are quickly snapped up.

Top hard drive makers Western Digital Corp and Seagate Technologies Plc both have plants in Thailand, where flooding has killed at least 377 people since July and devastated industrialized areas in the center of the country.

Western Digital's factories are closed and Seagate, while its plants are running, warns it could face parts shortages.

So, what is actually going on in Bangkok at the moment, it seems the flooding has cost many lives and for all of these and others in danger we all continue to pray for their safety and hope the flooding subsides allowing the population to try and recapture their lives again safely and quickly.

ZDNET has an interesting report on the tragedy that gives a further insight into what has actually occurred.

Western Digital CEO John Coyne said that the company's December quarter revenue will fall 60 percent from a year ago since the company has a high concentration of supply chain factories in flooded areas.

Recovery for Western Digital, which includes helping many of its workers affected by the floods, will be a multi-quarter task. Western Digital operating chief Tim Leyden said last week during the company's fiscal first quarter earnings call that the hard drive industry will see tight supplies for a while. Leyden said:

We suspended production in all of our Thailand facilities from the beginning of last week in order to protect our personnel, and to move as much equipment as possible to locations less likely to incur water damage. At this point, we are thankful that all our employees are safe, and we moved much of the equipment which had been situated on the ground floors to higher floors. Despite the heroic efforts of our team, over the past weekend rising water, which had first penetrated the Bang Pa-in Industrial Park flood defenses, inundated the Company's manufacturing facilities there and submerged the remaining equipment on the ground floors.

Western Digital executives said that 60 percent of its drives are produced in Thailand compared to 40 percent for the industry overall. The problem: Western Digital doesn't know when it can get its plants running, but the problems will "continue into the March quarter and beyond," said Leyden.

Other companies such as Seyyon Semiconductor noted that it will take a year for the tech industry's base in Thailand to recover. Nidec, which makes spinning motors for, said it is trying to shift production from Thailand to China and the Philippines. Nidec's ability to shift production will determine the industry's ability to produce hard drives.

Figure 2: Photo above of the Ayutthaya hard drive motor plant of Japan's Nidec Corporation. Production has been relocated to a factory in Pathumthani.

Seagate's facilities were largely spared, but the company will have to struggle to acquire components for its drives. Seagate CEO Steve Luczo said last week on the company's earnings conference call that "the flood disaster in Thailand is having a widespread impact on individuals and businesses of all types, including the hard drive industry, disrupting transportation, logistics, power generation, and the availability of labor."

As for the hard drive industry, Luczo said the situation is "serious and highly volatile." Due to pure luck, Seagate's plants are completely operational and running at full production. However, Seagate's component suppliers weren't as lucky.

Like Coyne and Leyden, Luczo said that the supply squeeze in the hard drive industry will extend for many quarters.

The Hard Disk shortage will continue to for the rest of the year, until the manufacturing companies effected try and get back to normality, a state that is not easy to predict from a timeline perspective.