Hard Drive Prices Up 150% In Less Than Two Months 304
zyzko writes "The Register reports that hard drive prices (lowest average unit prices) have rocketed 151% from October 1 to November 14th. The worst days have seen over 5% daily price increases. This is commonly attributed to the floods in Thailand, but there are concerns of artificial price fixing and suspicion that retailers or members of the supply channel are taking advantage of the situation."
The number varies when you break it down to individual drives, but it seems to be in the right ballpark. Anecdotally, the drive I picked up on Oct. 14th would cost me 135% more today. The flood waters in Thailand have partially receded, but aren't expected to be completely gone until early December. The damage to the country's economy and property is measured in the tens of billions.
What a crock. (Score:3, Informative)
I'm too lazy to look it up but the figure I remember seeing is that 25% of the world's hard drive manufacturing capacity has been impacted by the floods so the markup shouldn't be anything like 150%. It's just like the time RAM prices went thru the roof years ago, far higher than should have been caused by whatever problem caused a temporary shortage and they stayed artificially inflated for years. Same thing's going to happen with hard drives. Manufacturers will milk this for years.
Re:No, no, no (Score:4, Informative)
I read an article last week about how they are on average, 25% more expensive. Looking at many of the online retailers and some local vendors, most are 3x more expensive.
I bought a 2TB WD20EARS in September for $69, they are $299 at every local store now. The WD RE4 and Seagate ES drives are $399 for 2TB, which is only about 2x.
Here in Germany (Score:5, Informative)
RE: (Score:3, Informative)
The main reason is because of the floods at WD, the only major supplier of heads is Seagate in Derry. They are pushing up their prices to the makers because they can because demand is higher on them. A temporary blip because WD will be back up and running soon (i.e. by the end of 2012). Still, SSD's don't have the reliability nor will the increased price of HDD's scare people off, SSD's are still expensive.
Only 150%? (Score:3, Informative)
As a Seagate reseller in Canada, our cost on the most popular model we sell is up 191% (roughly triple). Seagate didn't even have a factory in the flood. WD (who did) is typically even higher, and many models simply can't be bought anywhere for any price.
Re:What a crock. (Score:5, Informative)
Well, hard drives are commodities, like orange juice, gas, oil, etc.
Prices are inflated now simply because everyone's got the "OMG I NEED A DRIVE NOW!!!" fever. Then again, drives today aren't any more expensive than they were just a year ago.
So if you have no need for a spare hard drive, don't be a sucker and buy now. If you find a sale, great, if not, hold off.
And yes, drive supplies will rebound because of one fact - a 2TB spinning rust costs way less than a 2TB SSD, and since drives are going 3TB+, I don't see SSDs catching up until drive size expansion slows below Moore's law. (SSD's fundamental capacity is driven by Moore's law - double the transistors in 18 months - double the capacity - SLC or MLC).
I'm guessing everyone's in a frenzy, but they'll recover in a few months and if it's been sitting on the shelf the whole time while you "stocked up", you'll look silly.
In short - buy if you really need it (and take notice in that drive prices really aren't sky high - they're just where they were last year or the year before). If you don't, just wait it out.
We thought we'd be stuck with $150 barrels of oil. They dropped under half that a year later.
Surely you mean "by the end of 2011"? (Score:5, Informative)
Or by March 2012, tops. [nationmultimedia.com]
Personally, I'd rather take the estimates of people doing their best to fix the problem... [marketwatch.com]
Plant managers at Nidec Corp. (6594), which makes motors for disk drives and also has a factory at Rajana, decided not to wait for the water to subside at its seven flooded factories. According to company spokesman Masashiro Nagayasu, they cut a hole in the roof of the Rajana factory, sent divers into the toxin-laden waters to unbolt some heavy equipment, and lifted it onto waiting boats. Some of the equipment is now being used in Nidec factories in China and the Philippines.
...than of CEOs like Seagate's Stephen Luczo [bloomberg.com] who are gleefully rubbing their hands together at the price hike, predicting a year-long shortage of hard-drives.
"People are going to appreciate the complexity of this business," he says.
Re:Here in Germany (Score:4, Informative)
Based on your numbers, prices are up 220%, not 300%. If something costs 3x what it used to, that's a 200% increase, not a 300% increase.
Don't Forget Contractually Obligated Allocations (Score:4, Informative)
Just to add to the parent, you also have to factor in contractually obligated allocations. Western Digital and Seagate already signed contracts with OEMs for Q4 (if not beyond) - at this point they're locked into selling a specific number of drives at a specific price. Short of going bankrupt, breach of contract is rarely the better option.
So while there may be a 25% shortage overall, what we're really looking at is supplies and prices in the retail market (anyone selling "retail" drives), and the spot market (OEMs, white box builders, and e-tailers like Amazon that sell "OEM" drives), the two of which are for all intents and purposes the open market. The result of those OEM contracts means that the entire 25% shortage needs to be absorbed by the open market. And since most hard drives are sold on contract to OEMs in the first place, the actual shortage in the open market is easily 50% if not more.
This compounded with the portion of drive sales that are inelastic, and some dealer panic/greed are what has driven up prices so high. 150% in these circumstances is quite high (and there's no getting around that), but it's completely rational for such a major shortage.
If it makes you feel any better, the OEMs will be getting screwed when they start their new contracts. At that point the OEM and open markets will be back in equilibrium - OEMs won't be able to suck up drives for cheap - and the shortage will be better shared by both parties. Drives will still be expensive, but they shouldn't be quite as expensive as they are now.
Don't hold your breath... (Score:4, Informative)
- Western digital (which just got the greenlight to acquire the Hitatchi HDD division)
- Seagate (which took took over the samsung HDD division)
- Toshiba (which only makes 2.5" HDDs)
The only real pressure to drop prices again would come from competition with SSDs, and those can't compete at all in in TB-range
Now, if you are in the market for a new HDD, your current best bet is to look at the brick and mortar department stores: Much of their remaining on-the-shelf stock hasn't caught up to the rapidly raises prices yet, which currently makes them a lot cheaper than online vendors... Provided you can still find them. Earlier today I saw a bunch of 1.5TB western digital elements drives on the shelf in Target for $79, while Amazon.com wants $129 for the same drive. 2TB for $89, instead of $159. But with the christmas shopping season starting, I'm sure that the department stores will run out of their cheap stock pretty soon.