Higher Hard Drive Prices Are the New Normal 268
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."
Really? (Score:5, Insightful)
It doesn't work that way (Score:2, Insightful)
This really is Economics 101. The maximum profit margin comes at the point where the supply curve and the demand curve meet. Raising prices above that point results in fewer sales and therefore less profit. Companies won't stop following this rule just because they have an "excuse" for raising prices. Partly because they didn't need an excuse in the first place, but mostly because they still have to compete with other companies.
Re:New solid state storage (Score:5, Insightful)
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.
Re:Really? (Score:5, Insightful)
Preferably by ending behavior that causes sarcastic shock.
Re:Really? (Score:4, Insightful)
your annual profit is $483 million. it's going to cost you about that much to build a new plant so you can sell your product cheaper and get your profit down to $200 million
these decisions aren't rocket science. i bet your're not running a business
Re:New solid state storage (Score:5, Insightful)
Most articles I've seen indicate that rotational storage ... will be replaced within 2 years ...
Most articles I read during the 1980s said the same thing.
Re:New solid state storage (Score:0, Insightful)
Really, "most articles" in the 80's? Hyperbole or bullshit; you decide!
Just reviewed prices online - what's the big deal? (Score:5, Insightful)
It seems like the 2TB desktop (ie, 3.5") disk is about $110. That's not so bad, considering I bought one for $95 about a year ago, before the floods. A 3TB is $160, about the same as last year from my recollection.
Of course, if you're buying 4x (say to build or replace a NAS), then you do see a noticeable cost difference, but it's not even 25% more.
A 16% (or even 37%) margin is does not indicate windfall profits or ludicrous extortion.
Re:Really? (Score:5, Insightful)
How is it illegal for a company to take what customers are willing to pay?
How is it illegal for companies to simply not lower prices... without colluding with each other?
Since when are profit margins required to be low?
Re:Really? (Score:5, Insightful)
Just to extend the argument, Game Theory suggests that there are 2 stables states when you get down to 2 or 3 big players. Either cozy (Biggest firm is the price leader, everybody follows suit. Nobody wants a war) or fierce - no quarter is given by either side.
Re:Really? (Score:4, Insightful)
Re:New solid state storage (Score:4, Insightful)
Ah, but we're neglecting the rest of the system. While the laptop hard drive is busy loading data, the rest of the system is consuming 20W. If it takes a minute grinding away to do something (and you're waiting for it), that's 20W-m of energy used up. If a more efficient SSD cuts it down to 20 seconds, that's 6W-m, and you get to do your stuff sooner. Win-win - laptop consumes less energy while waiting o nthe hard drive, user gets going faster.
Basically, individual component battery life measurements aren't as relevant as whole system power measurement.
It's just like the old Tom's Hardware report that SSDs consume more CPU, when in reality it's because the SSD is returning data faster so the CPU is busier giving it new I/O to do.
Hell, an SSD can give an older system new life - I have an old work laptop with a core2duo ("Vista Ready" to give you its age) in it. Replaced its hard drive with an SSD (from 160GB down to 120GB), damn laptop super-snappy and responsive.
Re:Really? (Score:4, Insightful)
Re:Really? (Score:4, Insightful)
SSDs actually make some sense here, because they use less power, and because they have a limited number of write cycles. A media library isn't written to very often, usually just once for any location, and then it's mainly read-only after that. The main downside, of course, is that at the moment, SSD has a significantly higher cost-per-byte than rotational storage. If the cost-per-byte were the same, even if the speed weren't any better, it'd probably make a lot more sense to use SSD for your media library.