Hard Drive Prices Hitting New Lows

Lucas123 writes "The average price of notebook hard drives tumbled to $53 in the third quarter of 2007, from $86 in the same period during the previous year, according to a survey by a market research firm. The price drop can be accredited to competition among six vendors, enormous demand for PCs and consumer electronics as well as evolving flash memory drives. 'Lower-capacity notebook drives showed smaller price drops, while newer high-capacity drives saw massive price drops ... Notebook drives with 320GB of storage will drop as a result of the addition of new features, while prices will stabilize on lower-capacity notebook storage devices like 80GB hard drives.'"

Enormous demand equals lower prices?

[spun (1352)]

Me fail economics? That's unpossible!

Re:Enormous demand equals lower prices?

[Kopiok (898028)]

It could be that the enormous demand is making mass production more profitable, and also leading to cheaper manufacture methods.

Re:Enormous demand equals lower prices?

[JonathanR (852748)]

No. Economics doesn't work that way. What it is is enormous investment in captial equipment combined with the lag between initial investement and full scale procution eventually leads to market oversupply, which is why the prices are reducing. Prices are lowered, margins get tighter, so production is ramped up to compensate.

Unless there is an opportunity to continue introducing 'premium' products (i.e. large capacity, or new features) using the same production technologies, then the margins get so tight that the weakest producer goes bust and/or is bought out by one of the stronger players.

Re:Enormous demand equals lower prices?

[Itchyeyes (908311)]

Enormous demand only means increasing prices if supply stays limited. As the article notes, though competition to meet that demand is fierce between the vendors, meaning increasing supply with demand and increased economies of scale, hence lower prices.

Re:Enormous demand equals lower prices?

[morcego (260031)]

That is not "unpossible".

Mass production is only viable with high demand. I'm not sure if you ever tried to negotiate shipment from a Taiwanese company. When they say 100, they are talking about 100 thousand units. 10K units is what they call a "small shipment". But I digress.

Anyway, a good part of the cost of a product is related to development. Creating new technologies is expensive. Several other costs don't scale directly with the number of items. So the greater the production, the smaller the cost per unit.

Add to that 5 other companies doing the same math, competing for the same market, and the prices will drop the higher the demand.

Ever since Henry Ford, the simple law of "supply and demand" is not so simple anymore. More often than not, the higher the demand, the lower the prices.

Re:

[billcopc (196330)]

If I were manufacturing the cheapest junk ever build, I'd want to coax my suckers into buying big too, because the same client won't be coming back, ever!

Seriously, we need to turn this garbage culture back around. Things are being designed to the very limit of human tolerance. I don't need gadgets that break every six months, I already own a f**king car.

Re:Enormous demand equals lower prices?

[Gospodin (547743)]

Ever since Henry Ford, the simple law of "supply and demand" is not so simple anymore. More often than not, the higher the demand, the lower the prices.

That's a shame - you were on a roll, writing the truth, etc. Then you wrote the above and went right off a cliff.

There's a lot of economic illiteracy in this thread, so let me clear up a couple of things. The law of supply and demand is basically a static law, making the implicit assumption that the supply and demand curves won't change (i.e. that supply and demand respond only to price, ignoring capital improvement, consumer needs, etc.). Since it's (nearly) always the case that, ignoring these other factors, higher prices result in lower demand and higher supply, the demand curve is downward sloping the the supply curve is upward sloping. Therefore, if the demand curve shifts up (which is what we mean when we say that "demand has increased"), the price will go up.

What you're talking about is that suppliers are predicting this and building out capital to expand capacity. This shifts the supply curve up. When both the supply and demand curves rise, the price may rise, stay the same or fall, and volume always increases. Your contention that prices will fall is simply untrue - what is true is that since marginal unit cost of production (esp. of tech products) tends to fall over time, supply can sometimes be increased dramatically. This is all perfectly captured by the old, boring law of supply and demand.

Breaking news

[Stormwatch (703920)]

This news just in: technology advances and gets cheaper. Film at eleven.

When News Breaks...

[Tetsujin (103070)]

Coming Summer 2008:

Roger Moore is a technology analyst caught up in a web of deceit and decreasing prices in the new suspense thriller: Moore's Law!

Re:Breaking news

[Sloppy (14984)]

It sort of is news. My experience up to now is that bang-per-buck increases, but the price of a widget didn't necessarily change much, even if this year's widget was 50x bigger/faster/more_reliable/prettier than the widget of ten years ago.

In 2000, I bought a video card (Matrox G400MAX, which I'm still using) for about $160, I think. What does a video card cost today? It's hard to say, since there's a lot of variety. But speaking very generally, a video card costs about the same.

Re:Breaking news

[matt21811 (830841)]

I studied this with hard disks and my data showed that the "sweet spot" hard disk (the drive with the best bang for buck) has actually steadily decreaased over time.
You can see the chart at the bottom of this page:
http://www.mattscomputertrends.com/harddrives.html [mattscomputertrends.com]
look in the Annual Sweet Spot Price Trends section.

Basically, my data disagrees with you. The average drive is getting cheaper.

Re:Breaking news

[dgatwood (11270)]

I'm not so sure about those trends. At least in the U.S., my experience has been that the average drive is slowly getting cheaper, but only if you pay full retail. What I'm seeing in my purchasing is a greater and greater reluctance by merchants to deeply discount hard drives. Where once we had $80-100 mail-in rebates, we now have $30 mail-in rebates or no rebates at all. The actual cost from what I'm seeing is staying roughly the same at the sweet spot. The only difference is that now I pay $100 at the register instead of paying $160 and getting a $60 rebate check after several months. Don't get me wrong---I much prefer not having to deal with the rebate B.S., but you can't ignore that comparing raw prices is something of an apples-to-oranges comparison.

Your mileage may vary, of course. I haven't looked back at register receipts or anything, and it probably doesn't help that I've sworn off Western Digital after a long string of premature drive failures. The brand limitations and the departure of several manufacturers from the market makes any useful tracking a bit harder for me. That said, I'm not perceiving prices (at the sweet spot) as being significantly lower than they were five years ago.

Re:Breaking news

[matt21811 (830841)]

Australia doesnt have a retail culture of rebates. It never has had one. The price used is the lowest advertised price found in a reputable computer magazine. This means the prices are good representation of what people payed for the drive at the time. It's Apples to Apples.

well, duh ... ?

[weighn (578357)]

Lower-[end technology] showed smaller price drops, while [higher-end technology] saw massive price drops

whodathunkit?

Also, Loss Leaders

[Glowing Fish (155236)]

I am assuming that a lot of this comes from pressures from customers, or retail stores, to keep prices down. At least on flashy equipment that customers will go for. I've noticed that RAM and hard drive prices are getting ridiculously cheap.

Some things, however, seem to be way overpriced. Go to bestbuy.com (for example), and do a search for items like parallel, power, USB, VGA or DVI cables. A parallel cable, for example (a fancy gold one, true) costs $29. A six foot USB cable costs $35. Even a power cable costs $12.

Hard drives have lots of moving parts, and chips and electronics. Cables are, more or less, lengths of wire, with probably around 50 cents worth of copper in most of them. I am assuming that stores are keeping down prices on flashy items so they can then get customers to pay way too much for utility items.

Re:Also, Loss Leaders

[TrekkieGod (627867)]

Some things, however, seem to be way overpriced. Go to bestbuy.com (for example)

Well, you picked a place that sells way overpriced stuff. Especially cables. People keep telling me how HDMI cables cost $100, and if you're trying to buy them at Best Buy, you do find them at that price (although, I'm now finding "cheaper" cables. $49.99 [bestbuy.com] is the cheapest I've found there. It says it's an "xbox hdmi cable", I assume microsoft doesn't have a proprietary plug and that's just a regular hdmi cable. If it's not a regular hdmi cable, then the cheapest is a $79.99 4' cable instead. On the other hand, if you do a simple google search, you'll easily find 6' cables for $6.99 [firefold.com]. Same for most other cables.

The lesson...stuff is getting cheaper, but you need to shop around before you buy. These days, with the convenience of the 'net, you have no excuse not to.

Re:

[Belial6 (794905)]

Take a walk into a 99 cent store sometime. Most of them now carry USB and Firewire cables at... You guessed it... 99 Cents. It is hard to believe that people are spending upward of $20 for a cable that obviously can be sold for $1 at a profit.

Re:

[TheRaven64 (641858)]

A free market depends on an informed buyer. Any situation in which the seller has more information than the buyer is not a true free market (as such, free markets are about as common as invisible pink unicorns).

Whats after Terabyte?

[headkase (533448)]

I have exactly one terabyte of HD space - that much was unimaginable to me only a few short years ago. Remember when Windows 95 only used somewhere around the neighborhood of 50MB? With todays OS storage requirements sitting around one GB it's not unimaginable anymore that someday the OS alone will be a terabyte (although I can't imagine what it would contain) and overall hard drives will be truly unimaginable sizes by todays standards.

80GB prices WILL go down significantly

[switcha (551514)]

How do i know 80 GB prices are sure to drop drastically?

I just bought one.

MS-OS = 75% of disk

[peter303 (12292)]

Dont worry, when you up grade tp 200GB, the Vista service pack will consume 150GB.

Too bad

[ShawnCplus (1083617)]

Well it looks like it now costs more to drive to the store than it actually does to buy the hard drive.

Someone should tell Microsoft

[angle_slam (623817)]

Microsoft is selling the 120 GB hard drive for the Xbox 360 for $180 [amazon.com]. For the same price, you could get a 750 GB hard drive [newegg.com] for your PC. Or, you could buy a 160 GB hard drive for $50.

80GB is "lower capacity" now?

[bh_doc (930270)]

Does anyone else find it amazing that we are at a time where 80 gigabytes can be called a "lower capacity" hard drive without laughing? I remember a time when simply *adding* a hard drive to your machine was a significant upgrade, and I'm only 24.

Re:In other news

[Tetsujin (103070)]

Clinton remains unelectable.

Hey, now, that Lewinsky chick said his election was just fine!