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Data Storage The Almighty Buck Hardware

Higher Hard Drive Prices Are the New Normal 268

Posted by Soulskill
from the sorry-about-your-luck dept.
An anonymous reader tips an article looking at the state of HDD pricing now that the market has had time to recover from the flooding in Thailand and a round of consolidation among manufacturers. Prices have certainly declined from the high they reached during the flooding, but they've stabilized a bit higher than they were beforehand. Quoting: "Are things going to change any time soon? We doubt it. WD and Seagate both reported record profits this past quarter. In Q1 2011, Western Digital reported net profit of $146M against sales of $2.3B while Seagate recorded $2.7B in revenue and $93 million in net income. That’s a net profit margin of 6% and 3%, respectively. For this past quarter, Western Digital reported sales of $3B (thanks in part to its acquisition of Hitachi) and a net income of $483 million, while Seagate hit $4.4B in revenue and $1.1B in profits. Net margin was 16% and 37% respectively. With profit margins like this, the hard drive manufacturers are going to be loath to cut prices. After years of barely making profits, the Thailand floods are the best excuse ever to drive record income for a few quarters. All of this means that while we expect prices to gradually decline, holding off on a necessary purchase doesn’t make much sense."
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Higher Hard Drive Prices Are the New Normal

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  • Its a cartel (Score:1, Informative)

    by Anonymous Coward on Friday May 25, 2012 @01:07PM (#40110269)
    Its the WD-Seagate cartel thats keeping prices up artifically and buying up any competitors
  • It kind of does. (Score:3, Informative)

    by Anonymous Coward on Friday May 25, 2012 @01:27PM (#40110499)

    In a perfectly competitive market with elastic supply and demand and where there are completely rational and well-informed consumers and producers, yes, your description of the market works.

    The problem is, this is a case where there are only two major suppliers, demand is relatively inelastic, and the vast majority of consumers have no idea what a hard drive costs to make. In other words, what you're seeing is more like monopoly utility pricing - and that means that as long as higher prices can be reasonably justified to the consumer (flooding in Thailand!) the producer can set and maintain higher prices basically at will.

  • by brian0918 (638904) <brian0918@nOSPAM.gmail.com> on Friday May 25, 2012 @01:28PM (#40110507)
    People love to shout "COLLUSION!" when more of their fellow consumers are buying the products they want - due to a) pent-up demand, and b) consumers hoarding products as protection against future price increases - but it's really just reality they are fighting against.

    Reality is not going to change, and all you do by trying to fight it (i.e. by demanding the government intervene and impose price controls) is destroy the companies whose products you enjoy and depend on.
  • by 0123456 (636235) on Friday May 25, 2012 @01:35PM (#40110571)

    This is a "transistors are crappy now vs vacuum tubes working great" argument.

    No, it's a 'flash is running into fundamental laws of physics' argument.

    I suspect another SSD technology will come along to replace it, but flash probably can't go much further unless you add a large oversupply of cells to replace those which die.

  • by Sycraft-fu (314770) on Friday May 25, 2012 @01:49PM (#40110793)

    It's called the "SSD" section on Newegg. You are right that head-in-the-clouds type tech people have been saying that magnetic media will get replaced, but it has just been wishful thinking. However now it is. SSDs sell quite readily. They aren't going to displace HDDs tomorrow or anything, and I'd say that 2 year timeline is a bit optimistic, but they are already making big in roads.

    While they don't compete in terms of storage/$ they are getting to the point where they are cheap enough for enough storage that people find them worthwhile. That's all it really takes. Few people actually need 2TB of storage, the idea that SSDs have to be dead equal to HDDs is silly. Many people will decide they can get on just fine with 160GB and would rather have the speed.

  • by iamhassi (659463) on Friday May 25, 2012 @02:01PM (#40110975) Journal

    Haven't they been saying that for a few decades now? Rotational media will be around for a long time to come, barring any real shattering breakthroughs in solid state media. Some markets, such as laptops and workstations which value speed over capacity, will likely transition to SSDs being the norm within the next 5 years or so, but when you need a lot of storage you'll still turn to hard drives for at least another decade or two. Given that hard drive technology is still having breakthroughs, it will be some time before SSDs can catch up in overall capacity, nevermind price per GB/TB.

    SSDs have already surpassed hard drives in capacity, with 16TB being offered on a single SSD. [guru3d.com] SSDs are less than $1 a gigabyte. [newegg.com] True, much more than hard drives, but 11 years ago when hard drives were $3 a gigabyte [xlr8yourmac.com] and 7 years ago hard drives were 50 cents/gb. [silentpcreview.com] Now hard drives are less than 1 cent a gigabyte, so how long do you think it will take SSDs to get there?

    SSDs have the huge advantage that everyone wants them. Every device needs fast access and transfer rates with low power usage in as small a space as possible. More devices means more sales means lower prices as they ramp up production. I have a feeling that by the end of 2012 people won't even be considering a hard drive in a PC anymore, everyone will just buy SSDs.

    Hard drives will never win the capacity war, not when they can currently put 64 gigabytes on a space smaller than your fingernail [newegg.com] and that includes the memory controller and case.

  • by kiehlster (844523) on Friday May 25, 2012 @02:32PM (#40111401) Homepage

    The big thing I see is that warranty lengths have dropped off to 3 years from 5 years on many of the high-grade models that are selling today. They still sell 5 year warranties, but at a premium. The real cheap ones have dropped to 1 year warranties. Are prices back to where they were before the floods? Almost. Is product quality back to where it was? Nope.

    I'll be waiting a little longer until I build myself another RAID. I believe we still have another quarter or two before we see the prices hit their baseline. I've been extending my purchase time frame by doing some serious house cleaning.

  • Re:Really? (Score:5, Informative)

    by DinDaddy (1168147) on Friday May 25, 2012 @02:53PM (#40111769)

    When there are only two or three competitors in a market, actual collusion is no longer necessary. They simply have an unwritten and unspoken agreement to keep prices where they are

    Ummm ... isn't that what collusion means

    No, to collude, they would need to communicate in some form, written or spoken. Just guessing that the other party thinks like you and acting on that assumption is NOT collusion.

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