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Data Storage The Almighty Buck Hardware

Retailers Respond To HDD Squeeze By Limiting Purchases, Raising Prices 282

Posted by timothy from the now-you're-ready-for-econ-102 dept.
SKYMTL writes "With Thailand experiencing its worst flooding in generations, component manufacturers have been especially hard hit. The trickle down effect is having a huge impact upon hard drive manufacturers in particular. Retailers have responded by drastic price increases and even limiting hard drive purchases to 1-2 drives per person."
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Retailers Respond To HDD Squeeze By Limiting Purchases, Raising Prices More

Retailers Respond To HDD Squeeze By Limiting Purchases, Raising Prices

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  • Price Spikes (Score:2, Interesting)

    by Anonymous Coward

    15%-30% price spikes? The 2TB drives I bought on Tuesday increased 46% in price (from $80 to $117) and not too long before them the had them on sale for $69.99.

    • Re: (Score:3)

      by ackthpt ( 218170 )

      15%-30% price spikes? The 2TB drives I bought on Tuesday increased 46% in price (from $80 to $117) and not too long before them the had them on sale for $69.99.

      So much for my plans of system upgrade any time soon.

      I can wait.

      • Yeah, me too. Here I was just thinking about buying a dedicated NAS box for my place to cut back on the power bill. Fuck.

    • That's fine, they will sell exactly ZERO of them until the price goes back to normal.

      So the manufacturers got flooded, tough tits. If the industry is managed in such a way that they can't buffer a few weeks of supply lag, then these people deserve to lose money. It should not be the consumer's burden. Globalization is a double edged sword and the manufacturers need to be held responsible for their record profits.

      • Given how quickly online retailers can adjust prices(essentially limited only by the speed at which the factors that control pricing decisions change), I'm guessing that they are either selling enough drives to be satisfied with the situation, or simply cannot afford to sell them any more cheaply, because of upstream price increases.

        Unless you have absolutely no overhead, and everybody has some, moving zero product isn't a situation you shoot for. Moving less product at higher margins is certainly a poss

        • Given how quickly online retailers can adjust prices(essentially limited only by the speed at which the factors that control pricing decisions change)

          That only applies to raising prices with some products. Watch how quickly the price of gasoline goes up when the oil price per barrel climbs and how slowly it goes down when the price falls.

          We've seen nearly a 50% drop in the price of a barrel of oil, and only about a 2% drop in the price of gasoline. During that same period, the cost of refining fell too.

          • I'm going to theorize "Moving less product at higher margins is certainly a possibility" on that one. There is, after all, absolutely no reason to suspect that anybody is going to lower prices any further than they absolutely have to.

            My point was just that, architecturally, online retailers can modify prices within minutes according to demand, their costs, whatever they can infer about incoming customers' price sensitivity, etc. That doesn't mean that they'll lower prices as fast as they raised them; but

      • Re:Price Spikes (Score:5, Interesting)

        by demonlapin ( 527802 ) on Friday October 21, 2011 @08:01PM (#37800744) Homepage Journal

        If the industry is managed in such a way that they can't buffer a few weeks of supply lag

        Pretty much the entire world works this way now. It's called just in time manufacturing, and it is one of the many efficiencies that enabled Toyota and Honda to ride roughshod over Detroit in the 70s and 80s. It's central to Wal-Mart's profitability. You save money by not having large stocks on hand - you don't have to pay to warehouse them, and you're not stuck with a large stock of unsellable items when you change the underlying product.

        • The WD 2TB drives that NCIX were shipping on Tuesday show a manufacturing date of June 23, 2011. I find it a bit of a stretch that the almost four months supply of drives have been sold in three days time. Even if I am incorrectly estimating the size of the pipe neither of us can deny there are cargo containers with drives in them (all with pre-flood dates) still on their way to destination ports all over the world (cargo shipping takes around 25 days from Malaysia to the USA). If we haven't used up wh

      • That's fine, they will sell exactly ZERO of them until the price goes back to normal.

        BS, those who actually need capacity NOW will still buy drives. So will those for whom the cost of hard drives is lost in the noise. The only people who will stop buying are those who either don't really need them right now or are really short on cash.

      • It's called "just in time inventory," which is why the drives are cheap(er) to begin with- no warehouse overhead expenses. I guess you also missed the whole supply & demand explanation for prices in school, too.

  • For once in my life I bought before the prices went up. :)
    I just bought a pair of 2TB drives for storing all my "Legally acquired media files." ;)

  • Price discovery make distribution efficient (Score:4, Insightful)

    by roman_mir ( 125474 ) on Friday October 21, 2011 @06:05PM (#37799896) Homepage Journal

    This is a good example of how raising prices works to distribute whatever resources in efficient manner, allowing those, who truly need whatever the resource (HDDs in this case) to come up with the largest bid on it, which means that the resource was most needed for that situation. It definitely beats artificial rationing.

    • This isn't efficient distribution, this is gouging. There are other factories in the world, the dealers are simply taking advantage of a natural disaster to arbitrarily hike prices.

      I was going to buy a stack of hard drives for a new server build, but now I'm going to wait it out. My supplier is not going to see a single penny from me for hard drives until this bullshit goes back down to normal. Since the majority of my sales consist of white-box file servers, that means they're losing out on about $20k a

      • Re: (Score:2)

        by Mr 44 ( 180750 )

        Perfect! If you can wait for your hard drives, by all means please do! Since there is now limited supply, you are leaving them for those who need them now (and are willing to pay for the priviledge).

      • Re: (Score:2)

        by Lando ( 9348 )

        I agree, they are raising their prices based on a perceived crisis. But under our economic system, price for goods is not tied to cost of production or supply, but by what the greatest net income can be received. Capitalism assumes that everyone is fully informed regarding all issues, since people are limited in time and information, it's not quite a perfect system. The store owners are just using the news that hard drive manufacturing has been hurt to artificially raise their prices. We'll see how

      • Re: (Score:2)

        by Ichijo ( 607641 )

        This isn't efficient distribution, this is gouging.

        Gouging is when a retailer sets the price higher than the market equilibrium rate where supply equals demand. If the price retailers have set creates a surplus, then there is gouging.

        In this case, because there is no surplus because retailers are rationing by "limiting hard drive purchases to 1-2 drives per person," there is no gouging.

        A more subjective definition of gouging is setting the price higher than some person is comfortable with. The term is often

        • Re: (Score:3, Insightful)

          by j00r0m4nc3r ( 959816 )
          This is definitely gouging. There is no supply shortage yet. Retailers are hiking prices on the anticipation of a shortage, which may or may not come to pass. There is a definite difference.

          • How do you know this isn't a response to customers trying to hoard drives due to the anticipation of a shortage?

          • Re: (Score:3)

            by Ichijo ( 607641 )

            There is no supply shortage yet. Retailers are hiking prices on the anticipation of a shortage...

            There is no shortage because retailers are hiking prices. The price mechanism [wikipedia.org] is how a free market efficiently allocates limited resources.

            If there were a shortage, it would be because the price is set below the going rate determined by supply and demand [wikipedia.org]. If you don't want a shortage, simply raise the price as necessary to prevent the shortage. This is what the retailers are doing.

    • It definitely beats artificial rationing.

      but it is rationed, from the summary :

      even limiting hard drive purchases to 1-2 drives per person.

      So it is then an hybrid approach to resource allocation. A market operating under regulations...

      Hybrid approaches that takes into account the wide spectrum of behaviours generated by life/physics/the universe random number generator know as god, are almost always better than those that repose on a binary world view that classify things in us/them, good/evil,etc... Most Manichean solutions to societal problems usually ends up in worsening them.

    • I think you are confusing "truly need" with "rich".

  • Can you say gouge? (Score:4, Insightful)

    by Anonymous Coward on Friday October 21, 2011 @06:07PM (#37799922)

    Jesus titty fucking christ.
    From 75 to 100 dollars in one day. http://www.newegg.com/Product/Product.aspx?Item=N82E16822136697

    Its like the industry is begging for SSDs to take their market. /begging/

    This isn't supply shortage it's price gouging. The industry has consolidated to four players, and one of them only makes laptop drives. Expect more of this shit in the future. Expect an SEC probe too and finding of price fixing, followed by a slap on the wrist a decade later. Fire in a dram factory anyone? Fuck me.

    • This isn't supply shortage it's price gouging.

      It's not a big step from the invisible hand (hard enough to conceptualize) to the invisible telepathic hand, where markets allocate goods to their highest utility without the price ever changing.

      Interesting to watch loss aversion shuttle the pea under the conspiracy shell after a tourettic stir fry in the amygdala.

  • Finally (Score:5, Funny)

    by woodhouse ( 625329 ) on Friday October 21, 2011 @06:19PM (#37800020) Homepage

    My scheme of buying computer parts to sell them on at a later date finally pays off.

    • Hmm, maybe I should put the 4x 3TB I bought two weeks ago up on eBay and see what they'll fetch...
      But seriously, this is going to hurt the industry. At my job we use huge numbers of HDDs. I hope there won't be a real shortage, "just" price hikes.

  • Also, people are dying (Score:5, Insightful)

    by Baloroth ( 2370816 ) on Friday October 21, 2011 @06:33PM (#37800094)

    Over 300 people have died (not huge, I know, but still not small... and the fact that I can say with all honesty that 300 deaths seems small says volumes by itself), homes and lives are ruined, ancient temples are threatened... and what Americans are most worried about is the fact that they have to pay an extra 20-30% for hard drives. Just to put this in perspective. TFA does at least have the decency to issue a "our hearts go out blah blah" at the end.

    Just watch, the next story will be something about Occupy Wall Street and people protesting those huge companies and all the cheap goods they make. Really, Americans (and most of the rest of the world) really need to look closely at the consumerism that has overcome our culture to the point people dying seems far less significant than money. I realize this is a tech/ nerd site (so it wouldn't focus on the deaths anyways), but still, this is the second story about this with no mention (as far as I remember) about all the other effects this flooding is having.

    • Re:Also, people are dying (Score:5, Interesting)

      by girlintraining ( 1395911 ) on Friday October 21, 2011 @07:45PM (#37800658)

      The Occupy protests are centered around the fact that the wealth distribution in the United States is ranked about the same as Uguanda; Half the wealth in this country is controlled by approximately 1% of the population, which is the reason for the slogan "We are the 99%". Occupiers have been protesting financial institutions, especially banks.

      Now if you hadn't had gone and shot your mouth off about something you clearly don't know anything about, I might have had a bit more sympathy for the rest of your argument. However, I'm going to have to mercilessly gut it now because I am the 99%, and I also have a healthy respect for capitalism -- within limits.

      300 lives is nothing. About 120 die every day in auto accidents. Americans are more worried about gas prices there too. Is that because they're heartless? No, it's because those 300, or 120, or a hundred million lives are abstract people. I've never met them. You haven't met them. Nobody who reads this is very likely to have met them. They lived in total obscurity and then some natural disaster came along and went squish, and that was that. They have had little to no bearing on my life, or yours, or anyone's here. But the price of those goods -- that is something tangible, noticable, and therefore real.

      You're bitching about human nature here, man. You're like Bono from U2. Nobody gives a damn about them and they shouldn't. They can't. We all got only a limited amount of time on this earth, and a limited amount of resources, emotional or otherwise. And the overwhelming majority of people are going to invest their emotions in things that are real, tangible, and close to them.

      Now next time you feel like trying to go and take the moral high ground, don't piss on someone else's back and then say it's raining, mmkays?

      • I dislike when people try and pretend that they feel the loss of every human life with the same tragedy. No, you don't. If you did you'd never accomplish anything because when you lose someone close to you it is amazingly tragic, and people die literally every second for all kinds of reasons. You just don't feel the same. The closer someone is to you, the more it matters.

        The reason we feel for large tragedies is because of the scale. When hundreds of thousands die, we feel the scale of that, even if we knew

    • Different people have different priorities. Some may not care too much about the lives of a select few strangers because those strangers don't influence their lives in any way. Though, the increase in hard drive costs might.

      People die all the time. When it's a stranger (especially one from another country), I doubt the average person cares too much about it.

    • I'm not sure you have perspective. Do you have any idea how many natural environments and indigenous species of plants and animals were permanently destroyed to populate those areas in Thailand? Or even your neighborhood? And all you think about is the 300 humans...

    • I do feel ashamed that the first I heard of this natural disaster / tragedy is from a news story about the price of hard drives. Thanks for drawing attention to the important part of this story.

    • Next time write your own article - send it to Dr. Phill.
      I just made 25% on STX stock this week. (and I don't need any drives right now.) In two weeks other plants will cover this "shortage".
      I don't live in a flood zone, so I don't even pay flood insurance, much less die in floods. If you want to save humanity have them move the freakin HDD factory back to my neighborhoods industrial park and I will gladly work there. p.s. - not New Orleans.
      Capitalism is about making the right choices, not crying about
    • Oddly, the part about people dying from the flooding seems not to be prominent in the news. If 300 died from some other disaster, I think it'd be a big deal...

  • SSD's have been gaining on hard drives for some time for a number of reasons, but price has been the primary area where HDD's could compete. With this event causing HDD's to be more expensive, is it finally the tipping point to SSD for most consumer products?

    • I suspect it's still a lot cheaper to buy a 1 TB hard drive than a 1 TB SSD (or 1024 GB SSD I suppose), if they even exist. But you do have a good point.

      • They exist, but the 1TB SSDs are really expensive. There was a story about OCZ's new one like yesterday.

      • Actually I do see a tipping point coming. SSDs are getting there with a capacity that's totally fine for a laptop as long as you don't want to carry all your movies and rips around (just a few.) Lowish-end SSDs can be had for about $1/GB retail. I had a 160GB HD in my last netbook (which I never needed) and the new one has 250GB, probably because that was the low end or the sweet spot for the manufacturer. But 60GB would be completely OK - I'd actually prefer a 60GB SSD over a 250GB HD any day. And the pric

    • Maybe OCZ had a hand in creating the flood...

  • Day late.. dollar(s) short (Score:3)

    by nurb432 ( 527695 ) on Friday October 21, 2011 @07:04PM (#37800336) Homepage Journal

    And i needed a couple of new drives.. i guess i will just wait.

    • Microcenter (locally) seems to have 3TB drives still in stock at original (not Newegg) prices.

  • Unfortunate their manufacturing is in a place where stuff like that can happen. Oh well.

  • I just bought a 2 TB Hitachi at the local CompUSA outlet store for $69.99 earlier today. It wasn't listed on their web site at that price, but that's what the shelf tag said. Maybe they just hadn't gotten around to updating the shelf tag yet? It *did* in fact initially ring up for $10 more, but I got it for $69.99 after pointing out the discrepancy to the cashier...

  • You're asking for trouble when you've got factories in a region that is prone to flooding *and* civil conflicts.

    Perhaps closing that First World factory wasn't wise after all.

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