Just how bad are hard drive prices going to get?

http://www.extremetech.com/computing/103711-hdd-pricewatch-you-know-where-its-going-we-tell-you-how-much-its-going-to-hurt

by mrsebastian • 15 years ago

74 40 15 years ago

extremetech.com

shimsham• 15 years ago

flash floods?

gtani• 15 years ago

The sign in costco blames floods in Thailand (you can only buy 2)

nobody3141592• 15 years ago

They are like traditional floods but much faster access - although much much more expensive

nakkiel6• 15 years ago

Monsoon floods. Way too much and monsoon rainfall combined with poor governance. Officials got a warning last year but didn't listen. Over 500 death so far.

jessriedel2• 15 years ago

>Here’s the really bad news. No one has actually run out of drives yet. Most manufacturers have stated they have drives enough to last them through the end of November, meaning that the current price hikes are the result of shipment reductions, supply-side manipulation to reduce demand, and undoubtedly some degree of speculation by the middle men. This last factor has an impact on the total price, but it’s not what’s causing the problem.

>First off, the so-called “gray” market for hard drives is going to explode....DigiTimes reports that gray market HDD sales are already booming as panicked OEMs have tried to lay in additional inventory to see them through the coming months.

The world must be a scary place when you don't understand basic economics, with a boogeyman man behind every corner.

spacemanaki• 15 years ago

Could you elaborate on your criticism?

I don't understand basic economics. It's something I regret and would like to change.

mkeblx• 15 years ago

It's a basic economic principle that if supply decreases with the demand staying the same the price will go up, and a sudden, unexpected decrease in supply will lead to activity of buyers to look elsewhere to meet that supply. Basically, what's happening is exactly what would be expected, but the reporting has a breathless tone.

It will be interesting though to see what effect a >50% supply decrease has on prices and the market once things com e to equilibrium when the timeline of the supply coming back is known.

nakkiel6• 15 years ago

The op is making reference to the the Supply and Demand model that is supposed to apply on markets [1]:

"It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity."

Note that the "comptetitive market" bit is important as it implies that the market is fully "free", which almost never happens IRL. Price fixing, strategies, stock market, governments, you name it. There are plenty of ways which make this model too basic in many cases. Worth knowing anyway.

That kind of things is best learnt with a grain of salt and some marketing knowledge as well. Read all the posts on "finding the right price" on HN to see how it does not necessarily apply -- but somehow does.

[1] http://en.wikipedia.org/wiki/Supply_and_demand

jessriedel2• 15 years ago

To add to what mkeblx said: what's happening is not only what's to be expected, it almost exactly what you want to happen ideally.

If suddenly the world supply of hard drives is cut to 10% of its normal values by a chance event (and we concentrate on the time period before new compensating production can be started) then those hard drives become more valuable. The price goes up, so that the people who are willing to pay the most for the drives get them. If Bob will only pay $100 for a drive because he's just using it to store his 2TB of cat pictures, but Sam will pay $500 because he needs the drive to run his business, then Sam will get the drive but Bob won't. If you try to hold down prices artificially with legislation (price ceilings) then each is equally likely to get the drive, which most agree is not good.

(Now, there are a million caveats to this naive Econ 101 treatment, especially regarding basic necessities--water, food, shelter--and disaster situations. And any normative "should" statement requires people to agree on a theory of ethics/morality. But in this case, most will agree that the basics of supply and demand lead to the appropriate outcome.)

------------

Incidentally, I was surprised to find that the Khan Academy has a bunch of macroeconomics and finance lectures, but little in the way of basic microeconomics. (This is especially funny because microecon is better understood.) Anyone know a better source for an introduction to supply and demand?

Symmetry• 15 years ago

And one more thing to add. If the speculators are doing their job properly the current price of hard drives is as high as its going to get, as opposed to the zero speculation market where prices don't skyrockets until the supply chain actually empties, and people aren't conserving their HD usage as much before then.

andrewcooke2• 15 years ago

why have they added 100% to all the percentage price increases? if something cost $100 and now costs $150 then the price increase was 50%, not 150%. grumble grumble.

sliverstorm• 15 years ago

Likely just some confusion on semantics. The price is indeed 150% of what it was, though it has not increased 150%

archgoon• 15 years ago

Which means it might have been altered by an editor who thought they were fixing a stylistic error.

bgentry• 15 years ago

Annoying mistake. Basic math is lost on so many people I guess.

Lagged2Death2• 15 years ago

I don't know if they've updated their chart since your observation, but the math looks right to me at this writing.

The WD10EARS drive (first row) was selling for $60, now sells for $140, and that is indeed an increase of 133%. The MP4 drive (last row) has risen from $50 to $100, and is noted as a 100% increase.

I think the chart would be improved by showing both the old price and the new price, making it more obvious how they arrived (correctly or otherwise) at the percentages. This way, checking the math requires visiting Camelegg oneself.

andrewcooke2• 15 years ago

huh. it looks like they fixed it. i didn't take a snapshot, but originally no value was under 100% and several were over 200%. and i checked the disk that was shown in the plot above.

oh, and they actually say so in the table caption: This graph was updated after publishing to fix the percentages. (although it's the table that was fixed, not the graph...!)

igrekel• 15 years ago

I was going to purchase a new NAS yesterday but they now only allow each customer to have a single hard drive with a purchase.

FollowSteph3• 15 years ago

Even though SSD's are still expensive (but well worth it in my opinion), we could see the $$/gb come close enough for them to cross into mainstream much much quicker. Most people honestly don't need 2-3 Tb's of space. It's nice to have, but more often then not it's not used up. And if you need more, you can always buy an external to store your media.

So if the price of a standard 2TB harddrive hits say $300-400, then it would make more sense to throw in a 256Gb SSD drive. Or even a 128Gb drive. It's small, but most people don't honestly use it. Plus it makes the computer feel many many times faster...

Mordor• 15 years ago

Isn't there going to be an increase in SSD's too?

nakkiel6• 15 years ago

I don't think so. Instead, price will likely not decrease; especially as/if demand grows.

tryke• 15 years ago

I would expect an increase in SSDs, especially since they are a "substitute good" for HDDs.

http://en.wikipedia.org/wiki/Substitute_good

nakkiel6• 15 years ago

What most articles fail to address is that most of the big brands have factories here and that Thailand accounts for a way too large share of the production of hard drive parts, regardless of brands. In other words, Thailand is the SPOF of the hard drive industry.

Also, FYI floodings are expected to last one more month (water just isn't flowing that fast) and factories will need time to recover and reach 100% operation (not to mention the overall infrastructure damage). The one month thing is an optimistic estimation from the government. A practical example: some Pakistanis flooded last year were finally getting back to normal when they got hit by this year's floods. No one really know how long it's going to last in Thailand.

WD, in a statement a few days old, said it expected to get back to full normal in the summer.

Edit: for those who just had no idea: http://www.boston.com/bigpicture/2011/10/thailand_flood_reac... (I used to live a couple of blocks away from picture 7).

nakkiel6• 15 years ago

I felt a bit bad a about the lack of figures in my assertions.

Regarding supply:

"HDD shipments in the fourth quarter will decline to 125 million units, down 27.7 percent from 173 million in the third quarter [...] Thailand is the world's second-largest producer of HDDs after China."

Regarding parts:

"component makers like Nidec [...] supplies more than 70 percent of all global HDD motors"

In other words, production will likely continue to drop until production resumes.

Source:

http://www.macworld.com/article/163336/2011/11/thai_floods_h...

CWuestefeld• 15 years ago

No one has actually run out of drives yet. Most manufacturers have stated they have drives enough to last them through the end of November

Actually, the situation looks much worse than that, from where I sit. I work for a major "large account reseller", and my code is what builds the customer catalogs, so I've got an intimate view of this.

As the drives become unavailable, one would expect them to be marked as backordered in the datafeeds we get from the suppliers. But the situation is so dire that two of the three major suppliers (Ingram Micro, Tech Data, and Synnex) have actually removed hard drive products altogether from their feeds.

(my code doesn't appreciate this: it knows the difference between backorders and discontinued products!)

wuster• 15 years ago

I think the best thing for everyone to do is to calm down and not go running to Costco/Amazon/Newegg to hoard hard drives.

http://www.npr.org/blogs/thesalt/2011/11/02/141771712/how-fe...

The perception of scarcity, which leads to hoarding, only makes the scarcity problem worse for everyone.

_delirium• 15 years ago

It can be good business to hoard and then, after hoarding drives up scarcity, re-sell at a higher price (the ticket-scalper business model).

billswift2• 15 years ago

I couldn't tell if you were being sarcastic since you didn't offer any explanation, but it is true and wuster is wrong.

Hoarders/speculators help by smoothing the scarcity and resulting price increases over time. By buying things up early, they increase the price and scarcity early, which gets people motivated to switch to alternatives when they can (and warns people who weren't paying attention to whatever caused the shortage, the floods in this case, of the problem). When they resell later, their stock keeps the shortage and price increases from being as extreme as they would otherwise get without the hoarders.

trafficlight• 15 years ago

Take a look at http://camelegg.com (a Newegg price tracker). Search for a hard drive, say 'Western Digital Caviar Black'.

Click on any of the drives and notice the more than 100% price increase on every single drive.

jaequery• 15 years ago

Just give it about two years, the hard drives will go the way of the dinosaurs.

Hard drives? What's that? It'll all be solid state drives.

wmf• 15 years ago

No, a roughly 10x price difference will not be eliminated in two years.

Lagged2Death2• 15 years ago

I'd love to believe that scenario, but R&D on spinning platters hasn't stopped, or anything. Solid state drives will get cheaper, but so will the mechanical ones.

lawnchair_larry• 15 years ago

I heard this is all because Goldman added hard drives to their commodities index. ;)

Just how bad are hard drive prices going to get?

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