Counting the cost of the floods in Thailand
The recent flooding in Thailand might pose significant global implications to the video surveillance market. Thailand produces approximately one quarter of the world’s supply of hard disk drives. As much of Thailand’s manufacturing and storage facilities are disrupted by flood water, the question is: how will this affect the video surveillance market?
The recent flooding in Thailand might pose significant global implications to the video surveillance market. Thailand produces approximately one quarter of the world’s supply of hard disk drives (HDDs), not to mention a large proportion of HDD components. As much of Thailand’s manufacturing and storage facilities are disrupted by flood water, the question is: how will this affect the video surveillance market?
With Toshiba and Western Digital temporarily closing HDD manufacturing facilities, and Nidec Corp. suspending operations in four of its six HDD components factories in Thailand; the probability of a major shortfall of HDDs is looking increasingly likely. This means companies such as Western Digital and Seagate could struggle to meet demand. Furthermore, there is limited stock in company inventories of HDDs due to challenging global economic conditions.
Companies who supply HDDs within video surveillance devices, such as digital video recorders (DVRs), may absorb a slight price rise, while companies who do not supply HDDs with their storage products are not likely to be directly affected. Distributors and system integrators who install HDDs in DVRs and other storage devices are also likely to be affected. They could absorb any price increases narrowing their profit margins, but will probably pass on any price increases to the end-user.
Users of lower capacity storage products could see a slight increase in price, but many users are unlikely to identify the price increase. Therefore, the lower end of the market will not be significantly affected. The effects of a price rise in HDDs could be more prominent within the enterprise class storage market. An increase in price on an already higher cost system will have a greater multiplier effect. As a result, enterprise customers could delay or temporarily scale down the size of their installations.
Considering the historical pricing pressure in the HDD market, the price of video surveillance storage solutions could stabilise rather than increase.
Should prices in traditional HDD based storage products increase significantly end-users may look to alternative storage solutions, such as video surveillance as a service (VSaaS) or solid state drive (SSDs). However, the price of both VSaaS and SSD is prohibitive and along with specific technological barriers, such a bandwidth restrictions, it is unlikely that such storage solutions displace HDD based storage products.
As for the legacy of the flooding in Thailand, it is likely that there will be no severe long term effects. What will be interesting though is the race to secure HDD production and supply. An ‘act of God’ has seemingly re-shuffled the pack, but it is still too early to suggest how the dynamics of the HDD market will change in the next six to twelve months.
- Events & Awards
- Magazine Archives
- Digital Reports
- Global SI Database
- Oil & Gas Engineering
- Survey Prize Winners
- CFE Edu