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Hard Drive Prices Hitting New Lows
Lucas123 writes "The average price of notebook hard drives tumbled to $53 in the third quarter of 2007, from $86 in the same period during the previous year, according to a survey by a market research firm. The price drop can be accredited to competition among six vendors, enormous demand for PCs and consumer electronics as well as evolving flash memory drives. 'Lower-capacity notebook drives showed smaller price drops, while newer high-capacity drives saw massive price drops ... Notebook drives with 320GB of storage will drop as a result of the addition of new features, while prices will stabilize on lower-capacity notebook storage devices like 80GB hard drives.'"
It could be that the enormous demand is making mass production more profitable, and also leading to cheaper manufacture methods.
No. Economics doesn't work that way. What it is is enormous investment in captial equipment combined with the lag between initial investement and full scale procution eventually leads to market oversupply, which is why the prices are reducing. Prices are lowered, margins get tighter, so production is ramped up to compensate.
Unless there is an opportunity to continue introducing 'premium' products (i.e. large capacity, or new features) using the same production technologies, then the margins get so tight that the weakest producer goes bust and/or is bought out by one of the stronger players.