Hard Drive Market: Now Warranty Cuts After Fluctuating Price and Flood

By siliconindia   |   Friday, 23 December 2011, 01:11 IST
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Bangalore: Consumer electronics companies and PC market was in a whirlwind after the floods in Thailand which brought an imbalance in the demand and supply of Hard Drives in the market leading to fluctuation in prices. The Hard Drive prices peaked a week after the flood and remained the same for quite some time. But over the past few days the price has been leveled and now it’s falling down causing a great concern for companies.  

Major hard drive makers has decided to take advantage of the supply/demand imbalance by reducing the warranty period as a new strategy to cover the short term loses and to keep up their profit margin. "This should have no effect on consumers because we hardly ever get returns in the second or third year and it frees up cash that we have to reserve to cover the warranties," said Stephen DiFranco, vice president of marketing at Maxtor.

Market leader Seagate reduced its warranty period to 3 years from 5 years for Barracuda XT and Momentus XT drives. Other Seagate products will only have 12 months warranty instead of 3 years. Another giant of this industry, Western Digital slashed its warranty period from 3 years to two years for Caviar Blue and Green drives and Scorpio Blue drives. 

Cutting the warranty period ultimately points out the fact that the companies are going to cut the quality in the drives too. Analysis also says that the consumer retail market will be hit by the shortages and price increases next year even though companies are trying to keep the inventory filled for their valuable customers the ‘computer system manufacturers’.