Retailers Respond To HDD Squeeze By Limiting Purchases, Raising Prices

SKYMTL writes "With Thailand experiencing its worst flooding in generations, component manufacturers have been especially hard hit. The trickle down effect is having a huge impact upon hard drive manufacturers in particular. Retailers have responded by drastic price increases and even limiting hard drive purchases to 1-2 drives per person."

Comments

Price Spikes

[Anonymous Coward]

15%-30% price spikes? The 2TB drives I bought on Tuesday increased 46% in price (from $80 to $117) and not too long before them the had them on sale for $69.99.

Re:Price Spikes

[Anonymous Coward]

The bottom of the barrel Hitachi 3Tb drives on Newegg went up from $119 yesterday to $209 today.

Re:Price Spikes

[ackthpt]

15%-30% price spikes? The 2TB drives I bought on Tuesday increased 46% in price (from $80 to $117) and not too long before them the had them on sale for $69.99.

So much for my plans of system upgrade any time soon.

I can wait.

Re:Price Spikes

[Xemu]

Classic PR tick to fake scarcity to make a bad deal appear better than it is. 99% of customers would only buy 1 anyway.
It means that they've changed from hi-tech marketing to commodity marketing like your grocery store always uses.

Re:Price Spikes

[billcopc]

That's fine, they will sell exactly ZERO of them until the price goes back to normal.

So the manufacturers got flooded, tough tits. If the industry is managed in such a way that they can't buffer a few weeks of supply lag, then these people deserve to lose money. It should not be the consumer's burden. Globalization is a double edged sword and the manufacturers need to be held responsible for their record profits.

Re:Price Spikes

[fuzzyfuzzyfungus]

Given how quickly online retailers can adjust prices(essentially limited only by the speed at which the factors that control pricing decisions change), I'm guessing that they are either selling enough drives to be satisfied with the situation, or simply cannot afford to sell them any more cheaply, because of upstream price increases.

Unless you have absolutely no overhead, and everybody has some, moving zero product isn't a situation you shoot for. Moving less product at higher margins is certainly a possibility, so that can't be ruled out on theoretical grounds; but it seems incredibly unlikely that the retailers have stopped moving stock entirely.

Re:Price Spikes

[sjames]

Not to mention that since they already bought the drives they are selling now, the price hikes are gouging.

Re:Price Spikes

[Anonymous Coward]

That's fine, they will sell exactly ZERO of them until the price goes back to normal.

No, they won't. Most people don't follow the HHD market closely enough to notice those price fluctuations, and while the percentage is high, HDD prices have dropped so much in the past few years, that the increase doesn't rely make a huge difference.

Then of course there's business customers, who'll probably pay regardless - missing a desktop for an employee, or holding off on increasing capacity on a production system when it needs it is likely to be more expensive than a minor bump in the cost.

Re:Price Spikes

[PopeRatzo]

Given how quickly online retailers can adjust prices(essentially limited only by the speed at which the factors that control pricing decisions change)

That only applies to raising prices with some products. Watch how quickly the price of gasoline goes up when the oil price per barrel climbs and how slowly it goes down when the price falls.

We've seen nearly a 50% drop in the price of a barrel of oil, and only about a 2% drop in the price of gasoline. During that same period, the cost of refining fell too. If the price of oil were to double tomorrow, the price on the pumps would jump $2/gal by Sunday morning.

Re:Price Spikes

[optimism]

Classic PR tick to fake scarcity to make a bad deal appear better than it is. 99% of customers would only buy 1 anyway.

Agree on the marketing trick, but disagree on the 99%. Many customers buy hard drives only in pairs. Mirroring is the easiest form of backup.

Re:Price Spikes

[maeka]

Not to mention that since they already bought the drives they are selling now, the price hikes are gouging.

That's not how pricing works.

Re:Price Spikes

[roman_mir]

I would go easy on him, he doesn't really know anything.

Re:Price Spikes

[sjames]

You must not understand what gouging is.

Sadly, that IS how pricing works, even if it's not a terribly ethical practice.

Re:Price Spikes

[optimism]

...since they already bought the drives they are selling now, the price hikes are gouging...

No, they're simply anticipating and spreading out the damage. This is microeconomics 101, supply & demand.

Let's say you're a big retailer who sells 10,000 drives per month, buying them for $70 each and selling for $100 each. You make $300,000 a month selling those drives. That revenue pays the salary and benefits for a couple of dozen employees.

Then the manufacturer tells you that, due to factory damage, they can only supply you with 2000 drives per month for the next few months. If all prices remained the same (which they probably won't; the manufacturer will raise your wholesale price if they can), you would lose $240,000 of your monthly revenue.

Now, your market research tells you that there is sufficient demand to sell 2000 drives/month at $200 each. You will still lose $180,000 of your revenue every month, due to lower volume, but the volume is now constrained by your supplier, not the market. Bumping the price saves you $240,000.

So you mark up the price on all of your existing stock now. And you still lose heaps of revenue until the manufacturer gets back up to speed. Might even have to fire a few employees to cut costs.

Re:Price Spikes

[demonlapin]

If the industry is managed in such a way that they can't buffer a few weeks of supply lag

Pretty much the entire world works this way now. It's called just in time manufacturing, and it is one of the many efficiencies that enabled Toyota and Honda to ride roughshod over Detroit in the 70s and 80s. It's central to Wal-Mart's profitability. You save money by not having large stocks on hand - you don't have to pay to warehouse them, and you're not stuck with a large stock of unsellable items when you change the underlying product.

Re:Price Spikes

[optimism]

Typo.

Bumping the prices saves you $60,000 per month. $180,000 per quarter, which may be how long it takes these factories to ramp up again.

Re:Price Spikes

[Z34107]

Mirroring is the easiest form of backup.

*giggles*

Re:Price Spikes

[petermgreen]

That's fine, they will sell exactly ZERO of them until the price goes back to normal.

BS, those who actually need capacity NOW will still buy drives. So will those for whom the cost of hard drives is lost in the noise. The only people who will stop buying are those who either don't really need them right now or are really short on cash.

Re:Price Spikes

[optimism]

Mirroring is the easiest form of backup.

*giggles*

Mirroring is the easiest form of backup.

*giggles*

Whoosh!

Explain the giggles?

Re:Price Spikes

[bryan1945]

It's called "just in time inventory," which is why the drives are cheap(er) to begin with- no warehouse overhead expenses. I guess you also missed the whole supply & demand explanation for prices in school, too.

Re:Price Spikes

[Tubal-Cain]

Probably something about RAID not being a proper backup solution.

Re:Price Spikes

[MachDelta]

Yeah, me too. Here I was just thinking about buying a dedicated NAS box for my place to cut back on the power bill. Fuck.

Re:Price Spikes

[Z34107]

S'actly. I was pretty sure its memehood was sacrosanct around these parts.

Re:Price Spikes

[trout007]

So is it gouging to sell stocks for more than you bought them for?

Re:Price Spikes

[kylemonger]

Using disks for backups is fine, using RAID is not. It's not a very durable backup if an errant delete command / virus / lightning strike would wipe both copies your data at the same time.

Re:Price Spikes

[hairyfeet]

Sure thing friend, here you go...Bam! It even comes with a linux based ISO to restore so if you bone your OS, a virus infects you (which WILL toast your mirror as well) or any other nasty thing happens its easy peasy to restore. oh and 100% free, so enjoy!

As for TFA I'm glad I loaded my machines up with Samsung drives when I heard they were selling their HDD division. I got 3Tb on the main machine, another 2Tb on the other, and a 1Tb external just for OS images and ISOs, I'm a happy camper with plenty of space!

Re:Price Spikes

[Festering Leper]

The WD 2TB drives that NCIX were shipping on Tuesday show a manufacturing date of June 23, 2011. I find it a bit of a stretch that the almost four months supply of drives have been sold in three days time. Even if I am incorrectly estimating the size of the pipe neither of us can deny there are cargo containers with drives in them (all with pre-flood dates) still on their way to destination ports all over the world (cargo shipping takes around 25 days from Malaysia to the USA). If we haven't used up what is coming down pipe then there shouldn't be 'shortage' pricing. At pre-flood consumption rates there will be no true shortages in North America for at least three weeks. So, yes, I would agree that retailers (or whoever changed the prices) are gouging at the moment.

Re:Price Spikes

[fuzzyfuzzyfungus]

I'm going to theorize "Moving less product at higher margins is certainly a possibility" on that one. There is, after all, absolutely no reason to suspect that anybody is going to lower prices any further than they absolutely have to.

My point was just that, architecturally, online retailers can modify prices within minutes according to demand, their costs, whatever they can infer about incoming customers' price sensitivity, etc. That doesn't mean that they'll lower prices as fast as they raised them; but it does make grandparent's "That's fine, they will sell exactly ZERO of them until the price goes back to normal." situation quite unlikely: a price at which there are no buyers would be adjusted within a very short time. If it so happens that you can get most of the buyers at twice the price, though, no real reason to move down...

Re:Price Spikes

[optimism]

I think we agree, except perhaps my definition of "mirroring" is broader than yours.

My original point was that more than 1% of folks buy hard drives in pairs, so they can back them up. Hence a 1-drive limit on purchases is ridiculous.

fwiw, I have never lost data to an errant delete command, virus, or lightning strike. I have lost data, several times, to hard drive failures (head crashes). I suspect this is the main data-loss scenario for consumers. NOT fire, flood, theft, lightning, etc. Simple statistical failure of cheap drives.

Re:Price Spikes

[optimism]

I got 3Tb on the main machine, another 2Tb on the other, and a 1Tb external

Whoosh! You thoroughly missed the point of my replies.

Let me put it this way:

You have 6TB of storage.

Let's assume that you actually use that storage.

So...where do you back up your 6TB of data?

(Hint: Even crusty old IT departments have moved their backups from tape, to disk, in the last few years.)

Re:Price Spikes

[rsilvergun]

If the data matters, you store it on another machine with removable drives, and take the drives off site. Then you change out the backup drives yearly. What you don't do is run a mirror. Mirrors are for hot swapping to avoid downtime. Not backup. Just 'cause it's convenient doesn't mean it's a real solution.

Re:Price Spikes

[optimism]

If the data matters, you store it on another machine with removable drives

Ding ding ding! We have a winner!

If you have 6TB of storage that matters, you need 6TB of separable storage for backup.

Hence, you buy drives in pairs. One for primary storage, one for backup.

End of story. :)

Re:Price Spikes

[maxwells_deamon]

You have never worked a stock job at a large grocery store have you?

its three days only if there is a huge panic. They even keep more than 3 days worth of eggs and milk in stock.. Some stuff they months worth.

Re:Price Spikes

[jones_supa]

Meta-nitpick: that would be more like a calculation error than a typo. I think "typo" is only limited to cases where your finger slips and in result you mistype some character(s).

Re:Price Spikes

[pe1chl]

Well, you have one very simplistic view of "backup"...
I would not talk about crusty old IT departments if I were you...

Re:Price Spikes

[drinkypoo]

So get on eBay, buy some kind of low-power SBC, and stick your existing drives in it. Done and done. Well, you may have to make a case. Most of us have or have access to cheap 12V switcher supplies; I have about six or eight of them around that I've picked up at yard sales ranging from about 1 to 3 amps (and about as many 5 volt supplies of the same amp capacity as well.) You can use a PicoPSU to power the board from one of the better types of those to save money if you have it lying around, and to give it legs as a vehicle-embeddable system down the road. I have a Geode system. If throughput is not critical you could also go with external enclosures; spinning down disks in them works fine. Then you could just use one of the many Pogoplug devices, on which you can install Debian so you don't have to use their idiotic management system. Even the Dockstar has GigE, but admittedly, the USB2 is not all that speedy.

Re:Price Spikes

[Stewie241]

Yeah but how much business are they losing? because i'm betting the amount of folks that have to have it NOW and are willing to be gouged is a hell of a lot lower than the normal consumer base. if you sell 20 thousand drives at 10% markup but only sell 1500 drives at 40% markup you're still losing business.

Losing to who? Is somebody else selling them for a lot cheaper? That only matters if the customers who will wait will purchase elsewhere instead of waiting for supply to go up and prices to go down. We *don't know* what drives were purchased for what price, so it is difficult to judge on that. What I would suspect is that for major retailers, they are going to adjust their prices based on the cost to replace the drives they sell because I would assume that as a retailer you generally replenish your stock as you move it.

Re:Price Spikes

[Runaway1956]

Uhhhhhh - 99% buy in pairs? You're limiting that statement to corporate and geek customers, right? If you include average consumers in your group of purchasers, I'd say that little more than 30% buy in pairs. I've NEVER heard the average consumer talk about or ask for a RAID array, a mirror, or even a backup drive. Never. Only geeks, and IT people. Even if you were including only geeks and corporate purchasers - many, many, many businesses don't understand or run arrays. Instead, they just use a central server for backups.

Re:Price Spikes

[demonlapin]

Under that scheme, there would be adequate supply for a few weeks and then a complete shutdown as supply went to zero. Don't like the prices? Don't buy.

"Gouging" is applicable when supplies are artificially restrained (like movie theaters charging $5 for a drink by refusing to allow you to bring one in from the outside). This is an open worldwide marketplace, and anyone who can undercut the elevated prices can make a lot of money doing so.

Re:Price Spikes

[RobbieThe1st]

That I'll agree 100%. I will say it's nice having a soft raid-5 for your data(mdadm raid-5 improves performance greatly over a single disk), but not for backup. You want a seperate, /disconnected-when-not-in-use/ drive or set for backups.

I also learned the hard way that EXT4 + deletion = extremely hard to recover from. NTFS and FAT and even EXT2 are much better in that regard. Which is why you should really have nightly/weekly backups of your stuff if you use it.

Re:Price Spikes

[ColdWetDog]

We've seen nearly a 50% drop in the price of a barrel of oil, and only about a 2% drop in the price of gasoline. During that same period, the cost of refining fell too. If the price of oil were to double tomorrow, the price on the pumps would jump $2/gal by Sunday morning.

No you haven't. What you've seen is a 50% drop in futures contracts for West Texas Intermediate (WTI) which means very little in terms of actual crude or product supply. News outlets like to brandish these numbers about because they move around a lot (so the world is ending at least weekly) and because it's simple.

But it doesn't mean much. Unless you are a mid US oil refinery.

Re:Price Spikes

[PopeRatzo]

No you haven't. What you've seen is a 50% drop in futures contracts for West Texas Intermediate (WTI) which means very little in terms of actual crude or product supply.

Well, the spot price didn't go down 50%, but it did go down over 40%.

So if the futures contracts are so disconnected from actual price and supply, can we agree that they cannot serve their function and do nothing more than provide a legal skimming operation or fixed casino gambling? That they are actually harmful to a functioning market?

Re:Price Spikes

[optimism]

Uhhhhhh - 99% buy in pairs? You're limiting that statement to corporate and geek customers, right? If you include average consumers in your group of purchasers, I'd say that little more than 30% buy in pairs.

GP claimed that 99% of customers buy just 1 drive.

I disagreed, believing that many more than 1% customers buy their drives in pairs, or larger quantities.

Your 30% estimate confirms my belief. Thanks.

Re:Price Spikes

[Runaway1956]

LOL - it would seem that I clicked the wrong "reply to this" - my post was addressed at the same comment that your post was. ;^)

Re:Price Spikes

[rtfa-troll]

In other words; if it's not offline then it isn't a backup. If your cloud provider tells you otherwise then fire your cloud provider.

Re:Price Spikes

[optimism]

Meta-meta-nitpick: Actually it was an "edit-o", i.e., when you edit/rewrite/move a sentence, but leave an inappropriate fragment of the older sentence in there. In this case, the number was correct until I edited that sentence.

IMO "typo" is a convenient shorthand for all manner of fat-fingering, editos, thinkos/brainfarts, phonetic replacements, and other isolated writing errors. But to each their own definitions.

Re:Price Spikes

[unitron]

Just tell them "If you don't have off-site backup, you don't have backup".

Re:Price Spikes

[unitron]

Not really. It's like when gasoline prices go up.

You've got to charge enough to be able to afford to replenish your supply which is going to be more expensive than what you're selling right now was, or you won't have any to sell next week.

Re:Price Spikes

[unitron]

Movie theaters do that because about 90% of the ticket price goes to whoever they've rented the print from, i.e., the movie's distributors.

What they really are is a popcorn store that uses the movie as a loss leader to get you in the door.

Re:Price Spikes

[sjames]

Yes, it's exactly the way gas prices jump the instant news comes out of unrest in the middle east (even though we get most of our imported oil from elsewhere), but when the unrest eases the same vendors claim there's a 6 week supply line and prices will stay high until it's cleared. Remarkably, that is where they post their record profits.

Re:Price Spikes

[unitron]

I'm talking about the retailer who is at the mercy of the wholesaler (who is likely at the mercy of someone further up the supply chain).

When wholesale prices go back down, if the retailer doesn't lower his, the retailer across the street will.

Re:Price Spikes

[artificial_construct]

That's cheap. Here in Sweden one of the larger computer stores changed the price of their cheapest 2TB Seagate drive from $105 to $472.

Re:Price Spikes

[monkyyy]

meta-meta-meta-nitpick: ive got nothin' but the chain must go on

Awesome!

[Capt.DrumkenBum]

For once in my life I bought before the prices went up. :)
I just bought a pair of 2TB drives for storing all my "Legally acquired media files." ;)

Re:Awesome!

[Anonymous Coward]

Well, I just "bought" a pair of 2TB drives for storing all my legally acquired media files.

Re:Awesome!

[Dunbal]

Same here - got a 3TB WD drive and installed it last week. Same drive has gone up 40%.

Re:Awesome!

[Anonymous Coward]

And "I" just bought a pair of 2TB drives for storing all my legally acquired media files.

Re:Awesome!

[cababunga]

You should sell it while it's high.

Re:Awesome!

[GameboyRMH]

I've done all my drive shopping over the last two years, I won't need to upgrade anything until the file server fills up and there's still plenty of space.

Re:Awesome!

[Anonymous Coward]

And I just bought a "pair"* of 2TB drives for storing all my legally acquired media files.

* For values of "pair" sufficiently close to 1.

Re:Awesome!

[Anonymous Coward]

Well I just bought a pair of "2TB drives" for storing all my "legally" acquired "media files".

~ Papa Lazarou.

Re:Awesome!

[DigiShaman]

I got lucky too, and so did a few of my clients. In just the last week alone I've done the following.

1. I purchased a new Seagate portable USB3 drive for my MacBook Time Machine backups.
2. A new WD MyBook used for client Windows SBS backups took a shit after only a month of use. Physical drive died. I instructed client to purchase Seagates instead. (WTF WD, your drives are shit as of late)
3. Laptop was out of warranty. I had a client purchase a new Hitachi 7200 RPM 500GB laptop drive to clone data. The old drive was dieing and data needed to be ghosted to a new one.

Damn, talk about dodging several stray bullet in cost on that one. Sheesh! And I rarely replace that many drives in such a short period of time.

Re:Awesome!

[jittles]

You should sell it while it's high.

I make all of my storage media pass a drug test before I will even buy it.

Re:Awesome!

[phantomfive]

" " " " " " " " " "


lameness filter Filter error: Your comment looks too much like ascii art. Please use fewer 'junk' characters.

Re:Awesome!

[TheRaven64]

I bought three 2TB hard disks two weeks ago (RAID-Z+dedup) and they seem to be about 20% more expensive now than when I bought them. To be honest, I don't think the change would have made any difference to me. 2TB is still the sweet spot. Mind you, 1TB was the sweet spot when I started thinking about building this machine, so it might have given me a reason to procrastinate for a few more months...

Re:Awesome!

[netsharc]

Does that make financial sense? If you only buy when you're running out of space, chances are you'll get a better deal. 2 years ago 1 TB would cost around (pulling number out of thin air...) $70, and now (or at least last week) for that amount of money you can get a 2TB disk..

Re:Awesome!

[GameboyRMH]

That's what I do, only buy when I'm running out of space (or building a new PC).

Just got mine

[RCC42]

Just picked up my latest hard drive a week ago. So I guess I should resell it now? How exactly is it that commodity speculators think again?

Damn

[Anonymous Coward]

I had a 2 gig that was on sale in my hand a couple weeks ago, and thought "nah, dont really need it now".

you know, it's not like it's a real shortage of hard drives or its end times for magnetic media. We're only talking about a period of a few months offline, surely theres enough stock to last.

This is opportunistic price gouging, and you should boycott everyone doing it, and identify the most eggregious offenders.

Re:Damn

[sinan]

Well, in 1991 I bought a 1GB drive from Andataco for $2700, a year later bought a 2GB drive for $2700. I remember oe of my EE friends telling me that we were at the "Physics limit" and could not go any higher in capacity.

Price discovery make distribution efficient

[roman_mir]

This is a good example of how raising prices works to distribute whatever resources in efficient manner, allowing those, who truly need whatever the resource (HDDs in this case) to come up with the largest bid on it, which means that the resource was most needed for that situation. It definitely beats artificial rationing.

Re:Price discovery make distribution efficient

[Anonymous Coward]

Exactly! This is just the same as how, in impoverished, underdeveloped, famine-stricken countries, the people who most need food and water simply pay a higher price for it. Those who choose not to bid a higher price obviously did not have a great need for those commodities.

Re:Price discovery make distribution efficient

[roman_mir]

Yes, I read that, this simply means they are not raising the prices high enough, but this artificial rationing is stupid, it doesn't work, as you can make more purchases by buying once, buying another time, another time, etc.

This makes a good opportunity for somebody to buy all of those drives and make a profit by selling them at a much higher price if the stores are forced into these worthless tricks with rationing.

Re:Price discovery make distribution efficient

[roman_mir]

this is artificial scarcity that you are talking about, because most of the problems in places like that are government (or whatever passes for a government) created. There are no free markets there, so there is no real price discovery, the places are used for their valuable mining resources most likely and the economies are not allowed to grow and improve because certain power brokers get their hands upon those economies by proxy and endorse various dictators and sell them cheap weapons to hold the people there hostages.

What you have here in your comment, is basic misunderstanding of economics and politics.

Re:Price discovery make distribution efficient

[billcopc]

This isn't efficient distribution, this is gouging. There are other factories in the world, the dealers are simply taking advantage of a natural disaster to arbitrarily hike prices.

I was going to buy a stack of hard drives for a new server build, but now I'm going to wait it out. My supplier is not going to see a single penny from me for hard drives until this bullshit goes back down to normal. Since the majority of my sales consist of white-box file servers, that means they're losing out on about $20k a month. Maybe not a huge amount, but I'm just one guy. The Dells and HPs of the world will also apply pressure a thousand times harder than little ol' me, which means this gouge will not last very long. I give it a month.

Re:Price discovery make distribution efficient

[roman_mir]

of-course it is. It's the only real and honest arbiter of need, because it's the only true way to discover a price - to bid for it.

Re:Price discovery make distribution efficient

[JonySuede]

It definitely beats artificial rationing.

but it is rationed, from the summary :

even limiting hard drive purchases to 1-2 drives per person.

So it is then an hybrid approach to resource allocation. A market operating under regulations...

Hybrid approaches that takes into account the wide spectrum of behaviours generated by life/physics/the universe random number generator know as god, are almost always better than those that repose on a binary world view that classify things in us/them, good/evil,etc... Most Manichean solutions to societal problems usually ends up in worsening them.

Re:Price discovery make distribution efficient

[roman_mir]

This isn't efficient distribution, this is gouging. There are other factories in the world, the dealers are simply taking advantage of a natural disaster to arbitrarily hike prices.

- is that what they taught you in your classes?

In this story the stores also decided to try and limit purchases by creating artificial rationing (which never works, by the way, just walk out and walk in again, or ask somebody to get another portion for you). So the stores truly were trying to solve a problem (as any price hikes based on more scarcity of resources are) - how do you sell at the optimal price? And this is the only real way to find the best efficiency in the market. There is always a price at which somebody is still willing to buy and then there is a price at which most are not willing to buy, so you have to find the price, that is the most efficient, which means people are still paying for it, but only those who REALLY need it.

Otherwise, if you sell UNDER priced, all you do is create another MARKET, where somebody buys from you and then resells on the corner at a higher price.

Do you ever think beyond your brainwashed state of absurd economic ignorance? You are exactly the person who DOES NOT NEED the hard drives bad enough to pay a higher price, and this is GOOD, because SOMEBODY NEEDS THOSE DRIVES MORE THAN YOU DO.

Somebody truly needs the drives much more than you do, and the raising of the prices allowed to cut you off and make sure that somebody who really needs the drives to get them before you do, because clearly - YOU CAN WAIT.

Somebody can't wait, and they will pay the premium. But if the prices didn't go up, then you would have bought your drives and there wouldn't be enough drives for somebody who REALLY NEEDS THEM, because you'd get your drives for your little project, but there is real actual SCARCITY here, because the plants are not producing enough supply to satisfy the demand at the previous low prices.

So you are giving an example in your very comment why the market works and you are calling it 'gouging', while you are 'gouged' alright. You are blind to the fact that the market did its job and the efficiency was achieved.

Re:Price discovery make distribution efficient

[xstonedogx]

I don't agree that it is stupid. They sell more than HDDs. If I am building a system and can't get my hands on an HDD I'm not buying the other components either.

Re:Price discovery make distribution efficient

[Mr 44]

Perfect! If you can wait for your hard drives, by all means please do! Since there is now limited supply, you are leaving them for those who need them now (and are willing to pay for the priviledge).

Re:Price discovery make distribution efficient

[Atlantis-Rising]

The idea that need can be determined by bid price assumes everyone has equal resources with which to bid.

If someone is auctioning off a steak, and you are starving and have no money and I am wealthy and not hungry, the fact that I can bid $5 for the steak and you can bid $1 does not mean I need it five times more than you.

Quite the opposite, in fact.

Re:Price discovery make distribution efficient

[roman_mir]

What did I say was stupid? The artificial attempt at rationing was stupid. The correct thing to do is to raise the prices enough, so that there is no secondary market formed (where somebody else buys the drives and still can sell them for a profit.)

If you need to build a computer right now and you can't wait, because the market is such that your project must be done now, you will pay a premium for this now more scarce resource, but at least you'd be able to BUY the freaking drives.

Here is a comment that was just left here as a reply to mine, complaining that this is price gouging, while simultaneously saying that he won't be buying his drives right now BECAUSE the price went up!

Well GOOD! This means the market IS doing its job, cutting off those, who do not actually NEED the drives at this time by increasing the prices enough, but at least those who actually do need to continue with their projects can get the drives and that guy CAN WAIT until they restart more production and prices go down again.

This is what markets do, this is what efficiencies are all about - finding the right availability/price ratios to satisfy the market demand in the most efficient manner to create a queue basically, to provide the resources to those who need them most first, etc.etc.

Re:Price discovery make distribution efficient

[roman_mir]

You should go back to this thread and read from the top. I address this - this is NOT a good idea and it doesn't work, because it immediately creates a secondary market, which will discover the price more perfectly (read - it will raise the price further to gain more efficient distribution).

You can re-enter the store, you can enter multiple stores, you can ask others to buy the drives for you, etc. The correct behavior is to raise the prices enough, so that only those who really need them buy them, but if the prices become too high, so that nobody buys, then you lower them a little and see what happens. That's basic market price discovery and it allows to queue up the resources for most efficient consumption, because some people can wait until the prices fall down, but some people need their drives, and if the prices stay low, they will NOT get their drives, because others will just buy them (and may resell them too.)

As to regulations - only market regulations are real and work, I am not sure what you mean by regulations your sense though, I'll leave at the fact that market IS regulating - the prices are higher and there is scarcity, but market will regulate further, and if prices are not high enough for most efficient distribution, there will be secondary markets. Somebody will buy those drives just to resell them at higher prices, which is really a good thing - this is what maximizes market efficiency.

Re:Price discovery make distribution efficient

[sjames]

Raising the prices would actually reduce profitability. Someone who just wants 1 drive now to build a system may be willing to pay a 40% premium, but not 100%. They wouldn't have bought 2 anyway.

Re:Price discovery make distribution efficient

[roman_mir]

You have just given an example that I will use to explain to you where your logic is flawed - if the stake is too expensive, then it means you cannot have it because the market efficiency was found.

If you have little money, it means you can't buy something that is too expensive for you, but this doesn't mean the market doesn't work! It works perfectly fine here as well. If stakes are bid on and there are only enough stakes and enough bidders so that the price is found at $5 for the stake, this means that the stake is sold at the most efficient price.

You shouldn't be trying to buy the stake then. If you are hungry and have $1 only and this stake is $5, it doesn't mean that you have a 'moral' right to that stake. This means that whoever paid $5 needs that stake AND can afford that stake.

OBVIOUSLY if the stake that somebody is willing to pay $5 for was sold at $1, that would be inefficient, and now you can turn around and make a profit. Sell that stake at $5 and put $4 into your pocket.

What you should do with that $1 is go to McDonalds and get something else to eat that they sell efficiently at those prices.

Re:Price discovery make distribution efficient

[Bacon Bits]

What you have here in your comment, is basic misunderstanding of economics and politics.

Welcome to Slashdot!

Re:Price discovery make distribution efficient

[roman_mir]

This is what price discovery is about. If the prices are too high and there are no takers, then the prices will go down. What do you think stores do all the time with prices? They are moving them up and down all the time. I build and sell software that helps the store chains and suppliers to do this - search for most efficiency via price discovery and by comparing product categories/brands/subbrands/suppliers/manufacturers/seasons/colors, etc. The prices always move as stores are searching for more efficiency and profit.

If the prices are too high, then there is something wrong as well, but if the prices are too low, then it's also a problem - the stores are then not doing their job.

Re:Price discovery make distribution efficient

[sjames]

Efficiency and progress is ours once more
Now that we have the Neutron bomb
It's nice and quick and clean and gets things done
Away with excess enemy
But no less value to property
No sense in war but perfect sense at home:

The sun beams down on a brand new day
No more welfare tax to pay
Unsightly slums gone up in flashing light
Jobless millions whisked away
At last we have more room to play
All systems go to kill the poor tonight

Gonna Kill kill kill kill Kill the poor:Tonight

Behold the sparkle of champagne
The crime rate's gone
Feel free again
O' life's a dream with you, Miss Lily White
Jane Fonda on the screen today
Convinced the liberals it's okay
So let's get dressed and dance away the night

While they: Kill kill kill kill Kill the poor:Tonight

With thanks to the Dead Kennedys.

Re:Price discovery make distribution efficient

[wisnoskij]

I think you are confusing "truly need" with "rich".

Re:Price discovery make distribution efficient

[roman_mir]

A funny song, but unless you are part of the government, I don't see why you'd want to run wars as your business. If you are not a gov't (or a gov't promoted weapons monopoly) wars are not really profitable.

Killing valuable resources is stupid (and people are also resources, they make stuff that others want.) The point is that you completely misunderstand what economy is. Economy is production and we want as many people producing as possible, so killing potential producers is really dumb. You have been trained to believe that economy is about consumption. Well, why don't the Fed just print a trillion trillion trillion dollars then and let you consume everything, see how that works out for you.

Re:Price discovery make distribution efficient

[Daniel_Staal]

It's likely only retailers who are limiting numbers of purchases. If you are big enough to really need a large quantity of drives, then you can buy from a wholesaler, or direct, and they'll probably sell as many as you would want.

The point of the rationing is that the retailers want to prevent speculative hoarding, where someone hears that the price has gone up, buys all they can, and then sells just a few at a higher price. (Reducing supply further, as they aren't actually doing anything with the drives, besides keeping them from the market.) It also means the retailers can present themselves as responsive to their customers (as they have the drives on hand to sell), and they can take advantage of further developments in the market over the next few days. (As prices spike under fear.)

They are acting to increase their profit, and their reputation at the same time. Perfectly logical capitalistic behavior.

Think of it this way: The retailers are speculating that the princes will rise still further. So they are preserving their stocks to sell at the (true) higher price, once it becomes apparent.

Re:Price discovery make distribution efficient

[roman_mir]

you are observing free market in action with the HDDs here being priced higher than previously. If no gov't steps in and starts distorting the market with regulations on who may sell HDDs to whom and at what price and what the rules are, etc., then you are observing the market as it is supposed to function.

As to entire nations running free market economies - USA 19 century basically, and China today basically. They are as free market economies as we have observed in the last 200 years.

We also have pretty good references to very non-free market economies, command economies and how 'well' they do, also in the same time frame.

Re:Price discovery make distribution efficient

[sjames]

An unregulated economy produces a bell curve. The low end of ity starves to death unless it resorts to crime.

Re:Price discovery make distribution efficient

[sjames]

And what they discovered is that an artificial limit is more profitable than gouging harder.

Re:Price discovery make distribution efficient

[roman_mir]

Why are you replying to me with that?

As to rationing - whatever their believes are, they are wrong. This doesn't work and it only can lead to some corruption (well, I don't know if this case is big enough for that, but in principle). It can lead to corruption, same type of corruption you observe with ticket scouts, who are the only ones that the tickets will be sold to in many cases, because they know the sellers at the theaters and prices are artificially lowered by gov't regulations, thus inefficiency created where true efficiency could easily be found by just raising the prices and allowing price discrimination at the theater cash register, which would put scouts out of business, by the way.

Re:Price discovery make distribution efficient

[roman_mir]

that's not in the story and obviously it's not true. What is more likely to be true is that they discover that their stock is emptied quickly, but that's just because somebody is buying all of it to resell at a more efficient (read higher) price at the corner, the way ticket scouts do.

Re:Price discovery make distribution efficient

[Lando]

I agree, they are raising their prices based on a perceived crisis. But under our economic system, price for goods is not tied to cost of production or supply, but by what the greatest net income can be received. Capitalism assumes that everyone is fully informed regarding all issues, since people are limited in time and information, it's not quite a perfect system. The store owners are just using the news that hard drive manufacturing has been hurt to artificially raise their prices. We'll see how it works out. Since not all wholesalers are raising their prices, shopping around will still get a decent price and willing people to sell the stock they have on-hand. I can't imagine the floods have already reached the supply chain, especially for drive manufactures not located in the flooding so the raise in pricing is strictly artificial trying to capitalize on a perceived shortage rather than an actual one.

Re:Price discovery make distribution efficient

[Ichijo]

This isn't efficient distribution, this is gouging.

Gouging is when a retailer sets the price higher than the market equilibrium rate where supply equals demand. If the price retailers have set creates a surplus, then there is gouging.

In this case, because there is no surplus because retailers are rationing by "limiting hard drive purchases to 1-2 drives per person," there is no gouging.

A more subjective definition of gouging is setting the price higher than some person is comfortable with. The term is often used in this manner by advocates of authoritarian governments to criticize the way capitalism efficiently allocates limited resources.

Re:Price discovery make distribution efficient

[sjames]

If it isn't true, why'd they do it?

Re:Price discovery make distribution efficient

[sjames]

You left out the other quaint aspects of the 19th century like child labor, families rendered destitute when the breadwinner was hurt or killed in an unsafe workplace, 18/7 work just to make ends meet, etc followed by a crash that forced the new deal to get things moving again.

Great deals of deregulation do typically lead to a boom, followed shortly by a crash.

The intrinsic problem with a completely free economy is that wealth attracts wealth and poverty attracts poverty. If you don't temper that with regulation, the people will temper it with violence.

Re:Price discovery make distribution efficient

[j00r0m4nc3r]

This is definitely gouging. There is no supply shortage yet. Retailers are hiking prices on the anticipation of a shortage, which may or may not come to pass. There is a definite difference.

Re:Price discovery make distribution efficient

[furbyhater]

Instead of talking about your classes, try to think for yourself and admit your reasoning is flawed.

Excessive use of caps = fail.

*off to sleep*

Re:Price discovery make distribution efficient

[furbyhater]

The point is that you completely misunderstand what the point of his post was.

*now really off to sleep*

Re:Price discovery make distribution efficient

[Kirijini]

If you are hungry and have $1 only and this stake is $5, it doesn't mean that you have a 'moral' right to that stake.

If steak is the only, or cheapest, food source, then you *do* have a moral right to the steak.* You just don't have the resources to afford it.

Face it - markets may be efficient in terms of short-term allocation of money value, but they are blind to morality. If you accept market outcomes as always being the "best" outcome, then you're ignoring moral values. It's up to you to decide if moral values are important to you.

*assuming that human life is morally superior to money. Everyone else who is hungry also has a moral right to the steak. The greatest moral right presumably goes to whoever is hungriest / most in need of nutrition to survive.

Re:Price discovery make distribution efficient

[furbyhater]

whoooosh!

Re:Price discovery make distribution efficient

[JonySuede]

no, I disagree, regulations when used moderately, can transform a Weibull(lambda>1,k>2) shaped resource distribution function into a Weibull(1>lambda>0,k<2) ressource distribution function. You evidently want to avoid the pure communist limit(Weibull(lambda,k<2),lambda,0) resource distribution function but unless you are in the top a%, why would you choose the first one over the second one ?

I used Weibull as an example as it can approximate a lot of distributions just by tweaking lambda and k.

Re:Price discovery make distribution efficient

[Col. Klink (retired)]

How do you know this isn't a response to customers trying to hoard drives due to the anticipation of a shortage?

Re:Price discovery make distribution efficient

[wisnoskij]

Well I never said that it is impossible to find an example of a potential customer that is both richer then average and of higher need then average. Of course like how a broken clock is right twice a day, a broken theory can have a few situations where it is right.
I am simply pointing out that raising the price of anything simply reduces its market and has nothing or very little to do with distribution to the ones who need it the most. And of course if you are rich enough then no matter the price you will find a way of getting what you need but if you are poor and need then the object you need better be cheap.

But of course this is assuming an economy that is at least somewhat like the US (aka capitalism).
In a perfect Communism where all money is distributed equally then of course your theory would work, but that is a 100% different environment then basically the entire world.

Re:Price discovery make distribution efficient

[xstonedogx]

I think you missed the point. They aren't trying to make sure everyone gets a drive. They aren't trying to get things into the hands of people who need them most. They are trying to maximize their profits. HDDs are only a single category in their inventory. Other categories are closely related to HDDs: OEM Windows, motherboards, hardware raid, memory, cases, etc.

If they sell 20 drives to a guy who really *needs* a RAID, they'll sell him the drives (at a possibly steeper premium) and one set of hardware to go with it.
If they sell 20 drives to 10-20 guys who really *need* a system, they'll sell them the drives (at some premium) and 10-20 sets of hardware to go with them.

As long as supply is constant there is no trade off. Once the supply is reduced, they have to decide which of the two scenarios above is more profitable.

And that's strictly the numbers. There is also goodwill and other factors to think about which may affect their long term viability after the shortage.

Re:Price discovery make distribution efficient

[Ichijo]

There is no supply shortage yet. Retailers are hiking prices on the anticipation of a shortage...

There is no shortage because retailers are hiking prices. The price mechanism is how a free market efficiently allocates limited resources.

If there were a shortage, it would be because the price is set below the going rate determined by supply and demand. If you don't want a shortage, simply raise the price as necessary to prevent the shortage. This is what the retailers are doing.

Re:Price discovery make distribution efficient

[Anonymous Coward]

Dude, it's roman_mir. His stupidity is legendary.

Re:Price discovery make distribution efficient

[phantomfive]

What you have here in your comment, is basic misunderstanding of economics and politics.

And yet somehow, he/she managed to get modded up twice.

Re:Price discovery make distribution efficient

[Curunir_wolf]

show me some legitimate examples of "free markets." No, I mean real examples, not fantasies quoted from airhead "philosophers."

Obviously never been to a Grateful Dead concert.

Re:Price discovery make distribution efficient

[Curunir_wolf]

The intrinsic problem with a completely free economy is that ... poverty attracts poverty.

Of course! Poor people love poor people. They are so attractive! People see that ghetto lifestyle and hanging out on street corners with cardboard signs, and their like "woohoo! I can do that too - and there's not government intervention to stop me!"

That god we have so much government intervention in the economy here, or there would be poor people on every damn busy street corner. AmIRite?

Re:Price discovery make distribution efficient

[Curunir_wolf]

The greatest moral right presumably goes to whoever is hungriest / most in need of nutrition to survive.

No, I'm sorry, but it is completely IMMORAL to allocate resources based on NEED. It's a morality of death, which is no morality at all. It enslaves those with the most ability, who will eventually starve because all the resources have been allocated to those less able to supply resources. That's a diminishing return on resources that will eventually lead do the death of the entire species.

Re:Price discovery make distribution efficient

[Curunir_wolf]

You're leaving out an important component of a free market: Those with the most resources are also the ones with the greatest ability to acquire resources. Efficiency has to work for the entire population, not just certain segments that you pick out so you can come up with some fake moral claim on others' property. If you start allocating resources based on need, instead, eventually there won't be any resources for anyone, because the reward system for pressuring actors to increase their efficiency vanishes, resources diminish, and eventually everyone starves.

Re:Price discovery make distribution efficient

[roman_mir]

this is slashdot, very few have that type of understanding here.

Re:Price discovery make distribution efficient

[roman_mir]

1. What are you talking about, there is nothing it the story that says they are making as much profit as they can.

2. You are using the word 'gouging' here and in other comments, because you don't understand basic economics. You think gouging is charging more than you like, especially after the store owner already bought the item out, which is pure nonsense. Store owner may buy the item, maybe he bought it on credit or debit, maybe he has a pay day DELAY even, maybe he is only paying for it after he sells it, there are all these possibilities, which you don't know. But it doesn't matter! Anybody can charge ANYTHING for ANY item, and 'gouging' is just a bullshit term because you can't have it because you are unwilling to pay what is being charged.

Re:Price discovery make distribution efficient

[roman_mir]

They aren't trying to make sure everyone gets a drive.

- right, that's NOT what I am saying.

I am not saying that a store owner is interested in some form of 'fair' distribution. I am saying that price discovery mechanism built is the principle, which will sort out the ordering of things, and it will figure out who is willing to pay how much for the drive, which allows those, who really need the drives to have access to them by cutting off those, who don't really need the drives bad enough to pay the premium.

This is not about some conscious decision on the part of store owner to makes sure 'everyone gets a drive' - this is not even possible with a shortage of drives. This is about store owner minimizing his losses and maximizing his gains, and the market acts as a discounting mechanism, which means the market ANTICIPATES a drive shortage and spikes the prices trying to find the balance, where people are still buying, so drives are still moving but the stock isn't emptied all at once by some third party, who wants to make the market by opening a secondary market (buying drives low from the store and selling high on the corner.)

My point earlier was that artificial scarcity added to the price hike only indicates that the store owner didn't discount the potential shortage enough, didn't raise the prices high enough to prevent a run on drives, so he is engaging in a worthless activity of trying to limit number of drives sold per person (maybe the store owner has different information than the buyers, so he actually wants to get rid of stock, and the limit thing is just to force the market into a more panic mode, but it's not a useful behavior for one store owner to engage into, it's better to raise the prices more).

As to 'goodwill' and all that, it's pure nonsense. Boycotting a store owner because he had higher prices for drives when there was a shortage (perceived or real) never works.

Re:Price discovery make distribution efficient

[roman_mir]

There was nothing remotely free about the crony capitalism and skewed legal decisions of the 19th

- you don't know the definition of the free market, and 19th century saw a very small gov't, the regulations were almost non-existent and gov't was tiny. The gov't grew over 20th century past 1913, as the Fed was created and income taxes introduced, which allowed the gov't to cut into income and not into consumption via excise taxes, so gov't grew and regulations grew with it, because every new gov't dep't is there to do more regulations.

Free market is market free of gov't regulations, so you don't understand that. Of-course whatever amount of gov't that existed in 19 century was also corrupt, but the gov't was TINY, that's the point. It couldn't possibly regulate as much and be as corrupt as it became once gov't broke the barrier of growth and started counterfeiting money, monetizing its debt and cutting into income/savings/investment of the economy, not into consumption.

Over 19th century USA experienced massive economic GROWTH, unemployment was nearly non-existent and dollar strengthened by a factor of 2 over that time period, all while the wealth was increasing due to all the new businesses.

The gov't was dealing with the largest businesses, such as railroads and steel producers, but the rest of the market was basically free to do what it does best - find efficiencies without restraint, bring more new products to the markets and lower prices via competition.

China today sees real economic growth because it's so easy to start and have a business there, which is a DE-FACTO situation right now. You maybe should pay attention to all of the manufacturing being outsorced to China. That's not because companies love outsourcing, it's because they can only compete and stay in business by outsourcing, because regulations in the rest of the world are numerous and expensive and monopolies are the preferred way of doing business for gov't.

Face palm, alright, but it goes to you.

Re:Price discovery make distribution efficient

[roman_mir]

You left out the other quaint aspects of the 19th century like child labor,

- of 19th century? Child labor existed always. 19 century brought it to cities, but it didn't create child labor. What do you think people did with children in 18th century, cuddled them with candy?

In FACT, 19 century free market capitalism made the people so productive, and started requiring so much specialization, that children:
1. Didn't have to be in the work force again, because their parents became wealthy enough through their productivity (land/capital applied to their labor) to be able to feed their children without sending them to work earlier.
2. Made the children a poor choice of worker, as more specialization required more knowledge, so 19 century actually pushed the children into more education, not more labor.

Gov't regulations don't stop child labor. Look at all the countries where there are regulations against it, but child labor still exists there. It's because it's POVERTY that drives child labor, not lack of gov't regulations.

Free market capitalism makes people productive and wealthy and that's what stops child labor (and slavery by the way, it's much more efficient to hire workers for pay than to own and take care of slaves, and free men work better.)

families rendered destitute when the breadwinner was hurt or killed in an unsafe workplace

- can't make on omelet without braking eggs. However the increase of wealth in that century allowed private charities to take care of those, who were truly in trouble. Gov't enforcing 'charity' is only stealing money and making people resentful of any real charity.

18/7 work just to make ends meet,

- can't make an omelet without breaking some eggs. UNTIL there is enough wealth in the system, everybody has to work more. Over 19 century the productivity grew so much, that people were achieving much more with much less work, and the century ended with a MUCH shorter work day. Henry Ford instituted 5 day 8 hour work day, paying 2 times as much as anybody else, $5/day, which was equivalent of 1.25 ounces of gold in a week, or over $2000 in current money per week (and that was WITHOUT INCOME TAXES). So in reality it's more like $3000 week, and eve that is not true, because the costs of living have risen so much thanks to gov't money counterfeiting.

Ford did it without unions but because of MARKET regulations - too much turn over in his labor intensive assembly lines. He even hired cripples, that nobody else wanted to hire, because his assembly line efficiencies allowed it to him.

He made people so productive, that with 8 hour days, with only working 5 days a week, his factory doubled production of cars after this, and the people were paid enough to maintain a family with a stay at home wife, 5-6 kids, pay for everything out of pocket and being paid enough to be able to buy a Ford car with 4 months of pay.

Great deals of deregulation do typically lead to a boom, followed shortly by a crash.

- ha ha ha ha, no great deals of REAL deregulations you haven't actually tried. Just removing partial regulations, while leaving the rest there, creates more imbalance that leads to more abuse. You are talking about Glass Steagal, but you are missing the important part of regulation that wasn't removed with it, what it was counteracting - FDIC and fake money.

The intrinsic problem with a completely free economy is that wealth attracts wealth and poverty attracts poverty

- no, that's intrinsic problem with command economies or with fascist economies.

Free market economies actually elevate everybody's standard of living, provide more new products, force prices to drop and create more leisure, that's what USA had in 19 century and beginning of 20th - almost completely free market.

Re:Price discovery make distribution efficient

[roman_mir]

No, there is no such thing as gouging. If the seller's prices are too high, nobody will buy, and if they are too low, he will be making a loss, as he gets out of stock quickly, secondary markets form, and he is left with an empty store to pay for.

Price gouging is not an economic concept, it's a social construct, it's when people think the prices are too high, they don't like it.

Well, if they believe this is gouging and that prices really shouldn't be so high, they shouldn't buy and the prices will come down. If they are wrong, and there is real shortage, then they come around and buy and likely prices will go up again if shortage lasts.

Market is a price discounting mechanism, and you clearly don't have enough knowledge about it if you miss such an important point.

Price gouging is from point of view of those, who can't afford the prices, but it doesn't mean ANYTHING if the drives are still sold, if there is a market for them at those higher prices.

As to somebody losing a business over this - people are irrational, things happen.

Re:Price discovery make distribution efficient

[roman_mir]

If steak is the only, or cheapest, food source, then you *do* have a moral right to the steak.* You just don't have the resources to afford it.

- if the stake is the cheapest thing around and people still end up buying it, then it's the correct pricing.

This is, in simplest terms, survival of the fittest then. If there are very limited resources, they HAVE to be rationed one way or another, and the market is the best rationing/price discounting mechanism. If you can't afford that stake BUT the stake still sells, then it's your problem to find a cheaper source of food or to rely on charity.

Of-course you can always come with: I will use force, well, that's also a market at work. Maybe you will use force, but who is to say that you'll win? Somebody with more resources to buy food may also have better protection.

As to morality - what is so moral about denying somebody WITH resources, somebody who CAN pay for the resources, while giving it to somebody who cannot afford it? I say it's immoral.

Saying: "everybody has a moral right to that stake" is fine, but it misses the point.

There is so LITTLE stake, that the prices could be set high enough to allocate that stake only to those, who can truly afford it. But this is the most moral outcome in the world!

If you are the ONLY person who can't afford the stake, you'll be taken care of by a charitable person.

If the majority of people can't afford the stake, it means the production of stakes is FUCKED UP. Exactly like the case today. Then you should ask the question: how come the PRODUCTION is so out of whack that most people can't afford that stake? If you are not completely brain dead, you'll realize that producers want the biggest market, but the thing that stands between them and production is artificial barriers (unless the earth is decimated by a meteorite or some such insane event.)

Re:Price discovery make distribution efficient

[roman_mir]

I tell you what, you bet your lambda against my understanding of how politicians sell power and I'll take that bet. The point is not to look at some silly function, the point is that regulations never work as you think they should. Regulations create gray/black markets, create under the table dealings (corruption) and that's what I meant by 'ticket scouts'. What do you think your regulations do, when they limit the access artificially without raising prices where supply demand are balanced? Your gov't regulations always lead to less efficiency and more corruption, with politicians being the power brokers, selling power for money.

Re:Price discovery make distribution efficient

[nabsltd]

there is real actual SCARCITY here, because the plants are not producing enough supply to satisfy the demand at the previous low prices.

Oh, really? You have access to the full inventory and shipping manifests from every hard drive manufacturer on the planet, and you can verify that the numbers as of right now are much lower than a month ago?

The problem is that you seem to assume that companies aren't going to take advantage of the loss of 25% of the hard drive manufacturing capacity to increase prices 50-90% right now despite any real scarcity (which may never exist), and then lower prices by 25% a few weeks after the plant comes back on line, then maybe drop prices another 25% a month or two later. The result will be that their profits for the next year or so will be a lot more, because they will be fast to raise and slow to lower prices, and hard drive demand is fairly constant.

The resellers and retailers are even more slimy, as it takes 3-4 months for a hard drive to make it from the manufacturer to the end-user, so right now there are 3-4 months of hard drive supply either in warehouses or on boats. If the plant is out of commission for a month, then prices should go up in January, and come back down before March.

What I'm wondering is how the hard drive manufacturers figured out how to cause the flood, 'cause it's a lot less suspicious than a fire.

Re:Price discovery make distribution efficient

[roman_mir]

Wait, so are you saying that a richer person who doesn't really NEED the drives will be buying them from under your nose as opposed to a richer person who needs the drives?

If somebody doesn't need the drive and they are richer than you are, they may still wait for prices to come down, otherwise they are wasting money.

If somebody is richer than you and they need the drive, they'll pay the premium for it and that's the correct way to do more efficient distribution. There are maybe 10 million people who want to buy the drives at their past prices, but the market figures that the supply will be limited to maybe 2 million drives. Now the stores have a dilemma - sell the drives now cheap, and be left without stock and still have to pay the rent and salaries, utilities, etc. Of raise the prices where the demand is cut by 80%, but allow the few drives that are in the store to cover the cost of the emptier stores standing there.

It's not about your moral indignation that you can't afford as much as another guy. It's about market finding its efficiencies, people who need the drives and have more resources than you affording them and stores still staying open and creating a signal to the manufacturers that there is a need for the drives even at those higher prices, so that more production is signaled to come on line.

You want artificial regulations to give you something you basically can't afford, well, that's how gov'ts destroy economies.

As to your line on

In a perfect Communism where all money is distributed equally then of course your theory would work, but that is a 100% different environment then basically the entire world.

- OH MY GOD. Is that what I am talking to here? Perfect Communism is when all money is distributed equally?

Are all those people PRODUCING equally? Because it seems to me you like nobody else to have more than you, but are you willing to work as much as everybody out there? Because I ensure you, you are NOT working as hard as most people who run their own businesses.

"perfect communism"... "money distributed equally"..... I hate this world.

Re:Price discovery make distribution efficient

[roman_mir]

Incorrect. It means that those who truly need the resource and who have the money to pay inflated prices will get the resource. Where it is "most needed" is irrelevant, and may well not be the most efficient. Welcome to one of the great lies about capitalism--that it is somehow naturally and magically "efficient". Nice try, though. I was wondering how long it would take for the propaganda machine to start up.

- that is a bunch of nonsense.

MANY people have enough resources to buy those drives at higher prices (not inflated - HIGHER). People who have those resources are not all buying those drives, because there are fewer people who need those drives than people who have resources to buy them.

So yes, the drives are going to those people who have the resources AND who have the need.

Your objection is that you believe you need that drive more than some guy with more resources? OK, if you truly think so - take a loan and buy that drive! If you have a BUSINESS case that you will produce something by buying that drives that will offset the cost of loan and will make you profit on that transaction, then you have a legitimate case that you need that drive, you can convince somebody that your plan will work, you'll get your loan and you'll get your drive.

You don't actually understand that, so whatever. You think you have more authority to say that you need that drive more than somebody with greater resources based on some idea of what 'fair' is. Well you do not. If you are unwilling to do all that work, it means you have just proven that you don't need that drive as much as the other guy.

Yes, this means the market is working fine at finding the efficiencies. The drive is more useful in the hands of somebody who is going to use it for production rather than consumption, because production is what economy is about, consumption is just a trivial consequence of production. The fact is - unless you are going to produce something with that drive rather than simply consume it, like a guy with more resources than you, then the fair and moral and correct and efficient thing to do is to sell the drive to the guy who can afford the higher premium.

---
As to Dell, HP, etc. The precise details are IRRELEVANT. The market is a discounting mechanism and it has to find the proper balance between supply and demand and price ratio. You can't understand it, because you grew up in a broken system, that doesn't want you to understand it.

Re:Price discovery make distribution efficient

[bestalexguy]

impoverished, underdeveloped, famine-stricken countries

May I add "increasingly overpopulated"?

Re:Price discovery make distribution efficient

[roman_mir]

I must have been asleep all this time then, now that a user with an ID that is 7.38 times greater than my welcomes me here!

Re:Price discovery make distribution efficient

[sjames]

1. What are you talking about, there is nothing it the story that says they are making as much profit as they can.

You believe they have seen the light and turned non-profit? Unlikely.

You are using the word 'gouging' here and in other comments, because you don't understand basic economics.

Then you must be wasting your breath arguing with a strawman you've built around me. Have fun, just go ahead and fill in my parts.

Re:Price discovery make distribution efficient

[roman_mir]

I am wasting my time on you, it's really a waste of time.

As to sellers turning 'non-profit'... it's you, who is building a straw-man, but also you are basically coming up with nonsense. Stores that set artificial rationing limits (1-2 drives per customers, all that), are either doing it to create more panic or they are not pricing the drives high enough.

Re:Price discovery make distribution efficient

[roman_mir]

No, it's "market" in action, but not "free market" in action: they are *absolutely* not the same.

- again, unless gov't comes in and starts coming up with regulations on who can get the drives, what the prices are, etc.etc., then it's free market for this specific instance. Free market is literally market free of gov't regulations.

Most of the high-tech industry in SE Asia is supported by the government

- I don't know all the details of how every single factory operates in Asia, but I am pretty sure that they don't need gov't to help them at all, as they are the only actual manufacturers (as this story proves). Subsidizing something like that makes no sense. However that's NOT what I am talking about, I am talking about gov't coming in with regulations on how to distribute the hard drives and forcing the stores to behave in some unproductive and inefficient manner, creating space for corruption and distorting the market.

Re:Price discovery make distribution efficient

[roman_mir]

man up and espouse the whole thing rather than claim that magic fairies prevent anybody from really starving or suffering when shortages occur.

- gov't creates scarcity by preventing savings and investments and by promoting consumption rather than production via the tax code, which is done to prop up gov't thirst for free money, as it steps in and counterfeits currency.

Droughts and all that nonsense happens everywhere and it's already discounted for in the price. Non-market economies just don't have the proper discounting mechanisms, they don't have any real price discovery and they break the feedback signals that are telling the producers how much and of what should be created.

Look, when a shortage occurs, higher prices mean that in the long term, there will be more entrants to provide that service. Moreover, in the short term, prices going up does encourage efficient allocation of resources, as only those who value the resources will take them at the higher price.

- yes, I said this in multiple comments here, I don't see where the argument is.

"But wait," I hear you cry, "I value those drives (or that food), I just don't have the money!"

- nope. That would be me saying it, it's the majority of those who respond to my comments are promoting that view.

Are you sure you are trying to reply to my comments and not somebody else?

Re:Price discovery make distribution efficient

[roman_mir]

No, I don't have access to all of the pieces of information, but that's unnecessary. If I need a drive and I can wait, I can buy it later at a lower price, because the market signals that were sent to manufacturing will cause overproduction, which will eventually lead to a lower price even than was previously there.

Market is a discounting mechanism, not just a current price discovery mechanism, so it takes into account all possibilities to find the most efficiencies. Whether the shortage is real or perceived the market is in better position to find efficiencies than any artificial regulations.

If stores are right and there is real shortage, then they are correct in raising prices right NOW, because if they don't, they'll run out of inventory and will have a shortfall later, when the drives are not coming in but they still have to maintain the staff, pay rent, utilities, etc. If the stores are wrong, then all they have achieved by raising prices is some drop off in drive buying at this moment, but they didn't prevent somebody who really needed a drive from buying it.

As to your numbers - the prices for drives didn't go up by 50-90%, they went up by 15-30%.

From the fucking story:

Speaking of price increases, we have seen a spike of 15% to 30% in the cost of some models over the last 72 hours.

this means that the market expects a quick recovery. If the prices went up by the amount that you are describing, that would have been a response to much heavier damage to manufacturing sector.

What I'm wondering is how the hard drive manufacturers figured out how to cause the flood, 'cause it's a lot less suspicious than a fire.

- you can't even imagine... how stupid that sounds. I build and sell retail integration/analysis software, which is used by stores and suppliers and manufacturers, and one thing is certain - no manufacturer ever wants to stop production. They want to continue production day in day out, every second of every minute of every day. Once the factory is up and running it's insane how expensive it is not to use it. God, the misconceptions in basic economics on this site are just overwhelming.

Re:Price discovery make distribution efficient

[roman_mir]

Yeah, if you go over this thread, you'll see so much misconception in understanding of basic economics that it raises hair on its ends. It's amazing how inadequate majority of posters are here in terms of economic understanding, and this is supposed to be one of more informed places on the web (obviously it's not true).

Most people think of suppliers as price gougers completely missing the point that those products are not some entitlement, they have to be produced and distributed and all the costs must be covered and profits must be made in excess of what inflation rates are and discounts have to be considered of the future situations... it's a very sad state of affairs here.

Re:Price discovery make distribution efficient

[Rockoon]

What are you talking about, there is nothing it the story that says they are making as much profit as they can.

The story doesnt need to state this.

It is a given that they are trying to make as much profit as they can, for that is what they do. If this werent the case, then competition would have come along and wiped them out a long time ago. In fact, the businesses that are still around wiped out those that werent as good at making as much profit as they could. They have proven to be the best of the best at it in the particular markets they exist in.

Re:Price discovery make distribution efficient

[roman_mir]

It is a given that they are trying to make as much profit as they can, for that is what they do. If this werent the case, then competition would have come along and wiped them out a long time ago

-

1. Read the comments by that poster, they are preposterous in what they are stating.

2. You are actually not correct, as the story states that a policy of 1-2 drives per purchase is implemented together with price hikes of 15-30%. This means that the stores are not making the correct choice, not setting the prices high enough and they are creating space for secondary markets, where somebody can buy more drives from the stores by purchasing multiple times (or asking others to buy for them), and then reselling at higher prices.

Are these stores 'best of the best' in every situation? I deal with various stores on daily basis because I sell them software, most of them are absolutely not the 'best of the best', they don't know what they are doing and many are only a week away from bankruptcy at any point in time.

Re:Price discovery make distribution efficient

[Blue Stone]

>This is a good example of how raising prices works to distribute whatever resources in efficient manner, allowing those, who truly need whatever the resource (HDDs in this case) to come up with the largest bid on it,

Um ... since when does having the greatest need equate to having the most money?

Re:Price discovery make distribution efficient

[roman_mir]

1. You are assuming that anybody with more money than you is interested in buying that stuff.

2. You are assuming that it is not true that if somebody is willing to pay more that they actually need the stuff more than you.

-
Do you know what the real queue is? It's not buying stuff for consumption, it's buying stuff for production. So if a company pays more than you are willing for some equipment, it's because that company will use the equipment for something productive, that brings them revenue stream and makes them profit and satisfies more market demand. There is a real multiplier effect when you buy something to be productive. When you buy something just to consume it, but not to produce more of something that market needs, then it's just consumption, which is the trivial end result of production.

Economy is about production, not consumption. Without businesses saving and investing and producing and hiring there is nothing else happening. Fish has to be caught first, before it is distributed somehow in the market, but there is no shortage of people who want to eat it.

--

So yes, more money means more need, if you don't have enough money to compete for CONSUMPTION with somebody else, if you come up with a case, how you can actually use the stuff to produce with that purchase, you can come up with a business plan, as to how you'll generate revenue and profit and somebody will be interested in investing in your plan and will subsidize your purchase.

OTOH if you are just competing with another person purely for consumption, then from POV of the manufacturer/merchant, it makes most sense just to sell to the highest bidder in the room, but then when the top bidder goes away, the remaining stock is bid again, and somebody else can buy if the price is lowered.

It is true, whoever has most money is the one who'll win the bid if you are not ready to take a loan and purchase the stuff, but in absence of gov't counterfeiting money, you only will get a loan if you are going to be productive with it, otherwise the stuff will go the person who already WAS more productive than you in the past (and that's why they have more money).

You can argue that the person himself wasn't more productive than you, say he inherited the money, but it doesn't matter. SOMEBODY was more productive than you if they have more money than you. How they did it is not relevant.

Re:Price discovery make distribution efficient

[TheVelvetFlamebait]

this is artificial scarcity that you are talking about, because most of the problems in places like that are government (or whatever passes for a government) created.

Regardless, the GP makes a fine point. Raising prices over artificial rationing screws over the poor people, regardless of what the government is like wherever they live.

Re:Price discovery make distribution efficient

[wisnoskij]

You don't seem to be paying much attention to what I am saying, but let me try this one more time.

"OR raise the prices where the demand is cut by 80%"
"It's about market finding its efficiencies"
YES, exactly, but market efficiency in terms of the profit of the retailers not distribution to those who need it.
You raise prices to cut the demand, but that has very little to do with trimming off those who do not need the object.

Re:Price discovery make distribution efficient

[Jawnn]

"Those places" have no government, at least in the sense of a government that is elected by, and serves at the pleasure of, "the people". No, the "artificial scarcity" was created by an unregulated market, wherein monopoly status and eventually outright thuggery is used to maintain an adventageous position. This is the logical end to the Rand fetishists' mythical "free market".

Re:Price discovery make distribution efficient

[roman_mir]

YES, exactly, but market efficiency in terms of the profit of the retailers not distribution to those who need it.

- of-course it is. If somebody buys the drive at a much higher price, it means he needs it. If you can't afford to buy the drive, it means you don't need it, it's that simple.

You can't afford to buy the drive, because you won't be doing anything productive with it. If somebody else can afford it, it means either they can justify the purchase with future production (profit), or they can justify their consumption with more of the production they did in the past (so they have more money than you).

Saying that they don't need the drive as much as you is a fallacy, obviously they do if they are buying it and you are not.

Re:Price discovery make distribution efficient

[roman_mir]

No it doesn't screw the poor people at all. The poor people can't afford those drives because they are not as productive and likely those who are buying the drives at higher prices need those drives more for production. If they are buying for consumption and they have the resources to afford this consumption at higher prices, then they have been more productive in the past, and really we want productivity to be rewarded, not moral indignations based on ideology of what's 'fair' or not.

Re:Price discovery make distribution efficient

[roman_mir]

Sure they have governments, they have FOREIGN governments that are dealing there by proxy, selling cheap weapons and ammunition, allowing whoever is in power currently to kill indiscriminately making sure that there is no free market and there is no any form of democracy.

What you are observing there is your own government in action, and the way the dictators behave there is what your government wishes it could do in your own country, all this, while the gov't brainwashes easy prey like to you think that free market is bad for YOU and that you need more government.

Re:Price discovery make distribution efficient

[TheVelvetFlamebait]

I'm still not seeing how this isn't screwing the poor people. The hard drives they need for their own 'productivity' are being redistributed to the rich. This potentially makes them poorer, and nullifies attempts at being more productive. Even by your twisted goals, as stated, this is not desirable. Instead, it reinforces a system whereby the productive stay productive, and the unproductive become a further drain.

really we want productivity to be rewarded, not moral indignations based on ideology of what's 'fair' or not.

Why? Why is it not important whether something is fair or not? Why is morality to be excluded, or more precisely, why should it be homogenised into this utilitarian system of morality, where productiveness is considered morally good? Why is it that productiveness trumps these things?

Well, for the most part, I guess, productiveness doesn't trump these things. Most democratic governments are willing to add caveats to their capitalist system in order to it to the morality of its people.

Re:Price discovery make distribution efficient

[roman_mir]

I'm still not seeing how this isn't screwing the poor people.

- what do you want? Confiscation and distribution of products that were created to make profit based on your idea of what is 'fair'? Why do you think poor should be able to get something they can't pay for, I don't follow?

The hard drives they need for their own 'productivity' are being redistributed to the rich.

- the supply/demand curve now meets at a higher price point, this cuts off those, who don't particularly need the drives at those prices, and it still allows those who really need the drives to be able to get them.

If prices are not raised here is what happens:

1. Anybody gets a drive at the old lower price, the stock is quickly emptied and those who need it more don't get it.

2. The stores are then making the profit for some of the time as long as the stocks last, all of a sudden there is a shortage and the stores can't get more drives. If that's the case, then you have a store that gets destroyed, which is also not an optimal situation for the distribution infrastructure. Instead the store raises the price, it collects more profit per drive, but the drives last longer in the store. If the shortage is real, the store will be able to cover the lower product turn over with higher prices and keep the store open, not have to fire people, search for lower rent, cut services, etc.

The point is that just because somebody is 'poor' doesn't mean they have the moral grounds to get some scarce resource at a cheaper price. When new plasma TVs came out the poor couldn't afford them at all! The initial prices were very high, only super rich and companies could buy plasma screens. Eventually the market sent signals that there was more demand, the efficiencies were reached, more production was brought on line, more competition, and prices fell eventually to the level where everybody could afford it.

It's the SAME situation in REVERSE. But this is a good thing that it works this way, it creates a queue, it sends signals to the manufacturers to bring up more production on line, and this eventually will result in even lower prices than originally were there.

This potentially makes them poorer, and nullifies attempts at being more productive.

- you can just take on faith that those who are richer are more productive than those who are poorer. Those who are richer generally invest into more business capacity, create more products, hire more people, etc., they are more productive just by the fact of having more savings and investments. Of-course it is desirable from every perspective that being richer should be rewarded more than being poorer.

Why? Why is it not important whether something is fair or not?

- because it's YOUR definition of fair? For example I disagree with it. You base it on some weird assumptions that poor people deserve more for some reason, I personally do not ever believe that for a second, never believed it in my life. I have good reasons to. Regardless of MY reasons - I disagree with you on what is FAIR. Do you understand that?

AFAIC the only fair outcome is the one that is NOT based on violence of gov't intervention, so it's a market based outcome, which always maximizes efficiencies and productivity, and I prefer productivity over moral indignations based on personal preferences of what 'fair' is.

I like a more efficient, more productive market. I like having access to more choices, more goods, more competition, lower prices. Productivity brings all of that about and moral indignations and gov't violence only shares one trait - poverty.

As to your last point - those economies, that have political systems that are corrupt because they are growing based on this idea, that they can distribute and enforce their idea of 'fairness' are now pretty much all bankrupt and they are only going based on the good grace of the economies that are almost unregulated and very productive. This proves my point.

Re:Price discovery make distribution efficient

[nabsltd]

As to your numbers - the prices for drives didn't go up by 50-90%, they went up by 15-30%.

From the fucking story:

Speaking of price increases, we have seen a spike of 15% to 30% in the cost of some models over the last 72 hours.

As many others have pointed out, the story is wrong.

Drives that were $100 (free shipping) on Monday are now $148 (shipping up to $8). That's 48%. Drives that were $120 on Monday are now $190. That's nearly 60%, and from the comments, that's not the biggest jump.

God, the misconceptions in basic economics on this site are just overwhelming.

Yes, and you are spewing most of them, because you don't realize that selling 75 drives at $150 makes the manufacturer more money than selling 100 drives at $100, and that's exactly what is happening right now, because every hard drive manufactured is going to be sold. Even with this jump, hard drives are nowhere near the price point where people will cut down purchases so that inventory sits in the warehouse longer than it currently does. And, I guarantee you that when the flooded plant comes back online and drives it manufactures are actually sitting in retail stores, they will be 5-20% more expensive than the same drive was this past Monday, because people will have gotten used to paying $160 for a hard drive that fits their needs, and won't quite remember whether it was $100 or $110 before the big price jump.

Re:Price discovery make distribution efficient

[j00r0m4nc3r]

There is no shortage because retailers are hiking prices

Bull. That's like saying the rock on my desk is preventing lion attacks. See? No lion attacks. It works! You don't get to raise prices based on the possibility of a future supply shortage. Just like you can't predict a shortage, you can't predict market demand. Sure there could be a shortage in 6 months, but demand for HD's could also suddenly plummet in the next 6 months, and then like magic it's balanced. I wonder why the retailers don't lower prices based on the possibility of a drop in demand... oh, right, because that doesn't let them gouge customers...

Re:Price discovery make distribution efficient

[roman_mir]

I am covering the story, sure, the prices can go higher than what the story had, because more time had passed. Good for them, they are trying to find the correct price and they are still selling at those higher prices, which means they can probably hike them further until there is little buying.
--

As to WHO is going to get more money - if a factory isn't manufacturing drives, it can't SELL the drives, can it? You are so ignorant, it's painful. A factory that is shut down isn't producing any drives, and the drives that were produced earlier are sold and shipped to suppliers immediately, factories don't warehouse the stuff, if they have to, they can cut production. So it's not factories that will be making the extra money when FACTORIES are shut down.

FTFS:

Late last week Western Digital announced that their hard drive production facilities in Thailand were shutting down due to the extreme amount of flooding.

...

It seemed like plants were safe from the rising waters but over the weekend things changed. Their facilities in the Navanakorn and Bang Pa industrial areas outside of Bangkok were inundated, likely adding equipment loss estimated in the millions of dollars to an already bleak situation.

So things changed, factories have to retool now, so it will take more time to bring manufacturing back on line, which probably means a longer delay and even higher prices.

Factories will get retooled eventually, will reopen and will overproduce into this higher priced market, and it will eventually push prices lower than they used to sell for.

Re:Price discovery make distribution efficient

[roman_mir]

You don't get to raise prices based on the possibility of a future supply shortage.

- ha ha ha ha, that's what futures and options contracts are - anticipation of an event, that's how markets do price discounting.

Retailers do actually lower prices on possibility of a drop in demand, when new versions of stuff comes out, the possibility is that the demand for the current versions will drop, so they lower prices, but this doesn't make a good slashdot story.

There is no such thing as 'gouging'. There is only supply and demand curves that can meet in different points on the graph.

Re:Price discovery make distribution efficient

[Jumperalex]

Your decision to stop producing servers is certainly yours to make. However, the day may come you need cash flow to pay the rent, or run the risk of losing customers who NEED more servers NOW and are willing to purchase elsewhere. At that point you might have no choice but to spend more for drives, and then charge more for your servers. That is called business. But right now all I hear is emotion. Again, your business to run, but let's not pretend that at some point you are biting off your nose to spite your face.

As for Dell and HP putting on the pressure ... you are right ... and that is how IT IS SUPPOSED TO WORK. Competing pressures to find an equilibrium that matches the market conditions. You say little ol' you can't put the pressure on, but rest assured a thousand little ol' you's are having to making similar decisions as you and at some point the HD suppliers do notice their aggregate profit dropping as volume decreases overwhelm profit margin increases. Then they will adjust prices to stay at the peak of the price/profit curve.

Re:Price discovery make distribution efficient

[roman_mir]

That's a fairly new definition

- that's not true. This is a very old definition of what a free market is.

You are right that monopolies do not promote free market, but monopolies are only created by governments. There are no monopolies in markets that are unregulated by gov't force, there are economies of scale, and any economy of scale can seem like a monopoly, but it's not. The reason it's is that there are no artificial barriers to entry into the market with a natural economy of scale, but with government the barriers to entry are not natural, they are artificial.

There is nothing wrong with economies of scale, they provide highest quality, cheapest goods to the markets. Eventually technology changes, new efficiencies can be found and there are new entries into markets where there used to be just a few economies of scale, so those are not actual monopolies.

This is how gov't creates monopolies.

Can you say gouge?

[Anonymous Coward]

Jesus titty fucking christ.
From 75 to 100 dollars in one day. http://www.newegg.com/Product/Product.aspx?Item=N82E16822136697

Its like the industry is begging for SSDs to take their market. /begging/

This isn't supply shortage it's price gouging. The industry has consolidated to four players, and one of them only makes laptop drives. Expect more of this shit in the future. Expect an SEC probe too and finding of price fixing, followed by a slap on the wrist a decade later. Fire in a dram factory anyone? Fuck me.

Re:Can you say gouge?

[skr95062]

Are you referring to the accidentally on purpose fire in the Japanese memory factory in the 90's?
The very next day memory prices just about doubled.
Absolutely nothing was done about it even though everyone knew that the retailers were price gouging.
I remember one retailer quadrupled their prices and made a killing.
Never dealt with them again.
Supply and demand is one thing deliberate gouging is another.
What is happening now is NOT supply and demand it is plain and simple greed, price gouging is a side effect.

Re:Can you say gouge?

[citizenr]

Are you referring to the accidentally on purpose fire in the Japanese memory factory in the 90's?

You mean Taiwan earthquake of 1999?

Re:Can you say gouge?

[demonlapin]

No, this was in '93.

Re:Can you say gouge?

[citizenr]

1993 price bump was barely 20%, 1999 price bump was >300%
http://www.jcmit.com/memoryprice.htm

Re:Can you say gouge?

[demonlapin]

1992.75 has 4MB chips for $105, 1993.75 has the same chips for $144. Nearly 50%. I'm not OP but it was enough to feel like "almost doubled overnight" when you factor in that it was 20 years ago. (Those also seem like better prices than I remember - the 16 MB of RAM I paid for in August of 1993 cost me about $700.)

Re:Prices for 2TB up 50%

[ackthpt]

Went to buy a 2TB hard disk today. The price was 50% higher than yesterday. Got a 750GB 2.5" external hard disk instead, which cost the same as before the flood. Damn disaster profiteers.

Yep. But did you really have to buy now?

I'm putting my purchase off for a bit. The flood didn't damage the HDD plant, once they have power back it'll be business as usual.

Re:Opportunity

[ackthpt]

What am I bid for this classic 5 MB 5 1/4 Full Height drive?!? Muah ha ha ha haaaa!

Of course I'm kidding - it's a collectors item!!

Finally

[woodhouse]

My scheme of buying computer parts to sell them on at a later date finally pays off.

Re:Finally

[rrohbeck]

Hmm, maybe I should put the 4x 3TB I bought two weeks ago up on eBay and see what they'll fetch...
But seriously, this is going to hurt the industry. At my job we use huge numbers of HDDs. I hope there won't be a real shortage, "just" price hikes.

Not quite how commodity speculators work

[sirwired]

If you were a commodity speculator, you'd have placed an order for way more than one hard drive a month ago for later delivery, and you'd be selling the right to have the billing and shipping information changed. You would never, yourself, actually have the ability to pay for, accept delivery of, or use, those drives.

Re:Not quite how commodity speculators work

[drinkypoo]

Isn't it possible to get stuck actually taking delivery of some commodities if you hold on to them too long? Or is that some kind of fairy tale?

Re:Not quite how commodity speculators work

[nedlohs]

Of course but you would never let that happen since you likely don't have a place to put thousands of tons of copper. And the contract has a fixed date so it's not like it can catch you by surprise.

the invisible telepathic hand

[epine]

This isn't supply shortage it's price gouging.

It's not a big step from the invisible hand (hard enough to conceptualize) to the invisible telepathic hand, where markets allocate goods to their highest utility without the price ever changing.

Interesting to watch loss aversion shuttle the pea under the conspiracy shell after a tourettic stir fry in the amygdala.

Also, people are dying

[Baloroth]

Over 300 people have died (not huge, I know, but still not small... and the fact that I can say with all honesty that 300 deaths seems small says volumes by itself), homes and lives are ruined, ancient temples are threatened... and what Americans are most worried about is the fact that they have to pay an extra 20-30% for hard drives. Just to put this in perspective. TFA does at least have the decency to issue a "our hearts go out blah blah" at the end.

Just watch, the next story will be something about Occupy Wall Street and people protesting those huge companies and all the cheap goods they make. Really, Americans (and most of the rest of the world) really need to look closely at the consumerism that has overcome our culture to the point people dying seems far less significant than money. I realize this is a tech/ nerd site (so it wouldn't focus on the deaths anyways), but still, this is the second story about this with no mention (as far as I remember) about all the other effects this flooding is having.

Re:Also, people are dying

[g4pengts]

300 deaths is bad. But implying that a tech oriented site reporting the economic effect on a piece of technology due to a natural disaster is wrong seems a bit odd to me. We can provide our supports to the people in the disaster area while contemplating how said disaster affect global economy at the same time. We don't need to choose just one.

Re:Also, people are dying

[misexistentialist]

Just to put this in perspective.

So, you are saying they worked in the hard drive factory?

Re:Also, people are dying

[girlintraining]

The Occupy protests are centered around the fact that the wealth distribution in the United States is ranked about the same as Uguanda; Half the wealth in this country is controlled by approximately 1% of the population, which is the reason for the slogan "We are the 99%". Occupiers have been protesting financial institutions, especially banks.

Now if you hadn't had gone and shot your mouth off about something you clearly don't know anything about, I might have had a bit more sympathy for the rest of your argument. However, I'm going to have to mercilessly gut it now because I am the 99%, and I also have a healthy respect for capitalism -- within limits.

300 lives is nothing. About 120 die every day in auto accidents. Americans are more worried about gas prices there too. Is that because they're heartless? No, it's because those 300, or 120, or a hundred million lives are abstract people. I've never met them. You haven't met them. Nobody who reads this is very likely to have met them. They lived in total obscurity and then some natural disaster came along and went squish, and that was that. They have had little to no bearing on my life, or yours, or anyone's here. But the price of those goods -- that is something tangible, noticable, and therefore real.

You're bitching about human nature here, man. You're like Bono from U2. Nobody gives a damn about them and they shouldn't. They can't. We all got only a limited amount of time on this earth, and a limited amount of resources, emotional or otherwise. And the overwhelming majority of people are going to invest their emotions in things that are real, tangible, and close to them.

Now next time you feel like trying to go and take the moral high ground, don't piss on someone else's back and then say it's raining, mmkays?

Re:Also, people are dying

[cheekyjohnson]

Different people have different priorities. Some may not care too much about the lives of a select few strangers because those strangers don't influence their lives in any way. Though, the increase in hard drive costs might.

People die all the time. When it's a stranger (especially one from another country), I doubt the average person cares too much about it.

Re:Also, people are dying

[j00r0m4nc3r]

I'm not sure you have perspective. Do you have any idea how many natural environments and indigenous species of plants and animals were permanently destroyed to populate those areas in Thailand? Or even your neighborhood? And all you think about is the 300 humans...

Re:Also, people are dying

[Kirijini]

I do feel ashamed that the first I heard of this natural disaster / tragedy is from a news story about the price of hard drives. Thanks for drawing attention to the important part of this story.

Re:Also, people are dying

[NemoinSpace]

Next time write your own article - send it to Dr. Phill.
I just made 25% on STX stock this week. (and I don't need any drives right now.) In two weeks other plants will cover this "shortage".
I don't live in a flood zone, so I don't even pay flood insurance, much less die in floods. If you want to save humanity have them move the freakin HDD factory back to my neighborhoods industrial park and I will gladly work there. p.s. - not New Orleans.
Capitalism is about making the right choices, not crying about the wrong ones.

Re:Also, people are dying

[seven of five]

Oddly, the part about people dying from the flooding seems not to be prominent in the news. If 300 died from some other disaster, I think it'd be a big deal...

Re:Also, people are dying

[cthulhu11]

and what Americans are most worried about is the fact that they have to pay an extra 20-30% for hard drives.

... which have been nearly free for years to begin with. I roll my eyes when I read a review of a 2TB disk that says that $150 or whatever is too expensive. Back when I worked for a certain computer vendor, a 1GB (or was it the new 2.5GB?) 8" IPI disk drive listed for $27,000 to our customers.

Re:Also, people are dying

[Max Romantschuk]

I don't want to be rude, but big and small natural disasters happen all the time.

In this case the effect on the IT industry is profound, because of the large amount of affected factories. "News for nerds, stuff that matters"

My point is that I personally come here mostly for the tech and science stuff. I get a regular dead tree paper delivered every morning to serve my local and "average joe" news needs.

Re:Also, people are dying

[phantomfive]

However, I'm going to have to mercilessly gut it now because I am the 99%,

You're also a self-centered whiner. The median income in the US is in the 1% of the world. If redistribution happened, you would most-likely end up worse off. Remember, not all the world is America. There are other parts, too.

Re:Also, people are dying

[flimflammer]

You're on a tech website, guy. I'm sorry but people dying in a natural disaster doesn't generally fit the theme here, so the relevant part of the situation was discussed.

Also, I don't mean to sound callous but do you know just how many people die every day unjustly or by means of something like natural disasters? Do you mourn them all every day with posts like these, or do you just feel like making a point about these few? Why are you putting them on a pedestal? I doubt you really care, and this is just karma whoring.

Re:Also, people are dying

[roman_mir]

OWS is protesting the wrong people and most of the protesters are doing it because they don't have a clue what's good for them. They are protesting 'capitalism', while actually protesting fascism/corporatism, where gov't and some corporations merge in a monopolistic orgasm.

They should be protesting the Federal reserve, Congress, Senate, White House and the Supreme Court if most of them actually understood WTF they are talking about, but looking at some of the demands I am not sure they are capable of that type of nuanced understanding.

What do you mean nothing was done

[Sycraft-fu]

They got sued for collusion and price fixing, and lost. Took a long time, of course, the law doesn't tend to move fast, but it happened. I received notice of the suit and eventually a tiny part of the settlement back in the day.

Don't go claiming "nothing happened" for an incident just because you didn't hear about it. Most things aren't front page news.

Re:What do you mean nothing was done

[skr95062]

I was talking about the retailers in my area that pulled this crap.
Nothing, absolutely nothing was done to them.

The tipping point to SSD's?

[Above]

SSD's have been gaining on hard drives for some time for a number of reasons, but price has been the primary area where HDD's could compete. With this event causing HDD's to be more expensive, is it finally the tipping point to SSD for most consumer products?

Re:The tipping point to SSD's?

[Bucky24]

I suspect it's still a lot cheaper to buy a 1 TB hard drive than a 1 TB SSD (or 1024 GB SSD I suppose), if they even exist. But you do have a good point.

Re:The tipping point to SSD's?

[j00r0m4nc3r]

Maybe OCZ had a hand in creating the flood...

Re:The tipping point to SSD's?

[hedwards]

They exist, but the 1TB SSDs are really expensive. There was a story about OCZ's new one like yesterday.

Re:The tipping point to SSD's?

[rrohbeck]

Actually I do see a tipping point coming. SSDs are getting there with a capacity that's totally fine for a laptop as long as you don't want to carry all your movies and rips around (just a few.) Lowish-end SSDs can be had for about $1/GB retail. I had a 160GB HD in my last netbook (which I never needed) and the new one has 250GB, probably because that was the low end or the sweet spot for the manufacturer. But 60GB would be completely OK - I'd actually prefer a 60GB SSD over a 250GB HD any day. And the price of low end HDDs is fixed because all HDDs cost the same to make as long as they have only one platter.

Re:The tipping point to SSD's?

[Tapewolf]

They exist, but the 1TB SSDs are really expensive. There was a story about OCZ's new one like yesterday.

I haven't seen a price for that one yet, but 1TB on a PCIe card goes for about £3'100 and I think that excludes 20% sales tax.

Re:The tipping point to SSD's?

[jones_supa]

That's a good point. I presume most consumers don't even nearly fill up their typical 100GB - 500GB laptop disk. The high-capacity HDDs exist mostly because it just happens to be possible to make them roughly for the same price as smaller ones. And as a side effect, big numbers look good in advertisements.

Re:The tipping point to SSD's?

[camperdave]

With this event causing HDD's to be more expensive, is it finally the tipping point to SSD for most consumer products?

Not even close. $100 only buys about 40G of SSD. Terabyte SSD drives are in the $500 range. The only market SSD wins in is the sub-40G market and that's only because nobody makes drives that small anymore.

Re:The tipping point to SSD's?

[petermgreen]

I suspect it's still a lot cheaper to buy a 1 TB hard drive than a 1 TB SSD (or 1024 GB SSD I suppose)

Indeed

if they even exist.

Afaict currently the most you can get is 600GB* in a 2.5 inch bay (one 2.5 inch drive), 1.2 TB in a 3.5 inch bay (2 2.5 inch drives with a mounting adaptor) or 3.6TB in a 5.25 inch bay (6 2.5 inch drives in a mounting adaptor). A 1TB 2.5 inch SSD has been announced but doesn't seem to be on the market yet.

The thing is a large proportion number of users really don't need that much storage. Most buisness desktops and laptops are likely to have windows, office and one or two specialist buisness apps. In most cases (unless the specialist apps are very large) that will probablly fit on a 60GB SSD which isn't wildy expensive. Buisnesses often tend to discourage people from storing lots of stuff locally.

Re:Meh...

[ackthpt]

I bought 6 Seagate Savvio 300GB (2.5" SAS 10k spin) drives yesterday. They were $199 (relatively cheap) and now are $267 or higher at most eTailers.

I'm sure most of it's fear mongering but some "analysts" have suggested it may take "several quarters" for the drive mfg's to recover from this. So I figured why chance it and bought what I needed rather than deal with potential inflation for 2 years.

As the economic model plays out (unlike the ways politicians make stuff up) if other manufacturers have untapped capacity they will ramp up their capacity to take advantage of realizing higher sales (and potentially profit) The market is elastic and prices will adjust again. (This is the stuff I found so utterly fascinating while studying economics, when you see real markets behave as expected.)

Day late.. dollar(s) short

[nurb432]

And i needed a couple of new drives.. i guess i will just wait.

Re:Day late.. dollar(s) short

[StingingNettle]

If we manufactured them here, you would have drives by now.

Re:Day late.. dollar(s) short

[Osgeld]

they would probably be half as fast and use twice as much energy ... seems to be the standard for American products, which is a shame

Re:Day late.. dollar(s) short

[jvj24601]

Microcenter (locally) seems to have 3TB drives still in stock at original (not Newegg) prices.

Re:Day late.. dollar(s) short

[greylion3]

or put up an ad for a used one, and require the S.M.A.R.T. readout, and check whether the ones offered have the 'head parking click' syndrome or some other hard/impossible-to-fix problem.
A suspiciously low price could indicate such a problem with the drive model or series.
If you don't know how to read the readout, post it on a forum where someone does, and ask whether you should buy it or not.
You can ignore any drives offered, that have a Reallocated_Event_Count or Reallocated_Sector_Ct over 0.
Any with a Current_Pending_Sector count over 0, but in the single digit area might be O.K., but should be cheap.

Hmm, I'm starting to wonder - some of us should get together and make a database over drives with design flaws and other impossible/hard-to-fix problems, or does this already exist?
That would make it a lot safer to buy used drives, if you could check the model nr. against such a database.

It's unfortunate.

[taxman_10m]

Unfortunate their manufacturing is in a place where stuff like that can happen. Oh well.

Hmm...

[Just Brew It!]

I just bought a 2 TB Hitachi at the local CompUSA outlet store for $69.99 earlier today. It wasn't listed on their web site at that price, but that's what the shelf tag said. Maybe they just hadn't gotten around to updating the shelf tag yet? It *did* in fact initially ring up for $10 more, but I got it for $69.99 after pointing out the discrepancy to the cashier...

Re:Hmm...

[Osgeld]

Wow you found a compUSA store?

Re:Hmm...

[Just Brew It!]

In name only. TigerDirect acquired the rotting corpse of CompUSA when they went tits-up and closed most (all?) of their stores a few years back. So CompUSA is effectively TigerDirect's B&M division now. They've been (re)opening CompUSA stores in a few areas (mostly Florida, Texas, and Illinois) over the past couple of years; the one near me used to be TigerDirect's Chicago-area outlet store (so they basically just changed the sign on the front from TigerDirect to CompUSA).

The store itself is actually kind of ghetto -- it tends to be disorganized, the customer service ranges from mediocre to awful, and some of the stuff they're selling is junk. But if you know what to look for (and what to avoid!) you can get some decent deals; they're also really handy for those "geek emergencies". The local one is on my way to/from work, so fairly convenient.

Re:Hmm...

[Osgeld]

Yea I knew they went ass out, I pillaged them quite well in my area, knowing tiger direct is re opening "my kind of place" makes me happy

Re:Hmm...

[Just Brew It!]

I've got a love-hate relationship with the place. If you can imagine "Best Buy's computer/TV/camera department meets dingy flea market, with prices that are sometimes comparable to Newegg's (but usually just a bit higher, and occasionally lower), and highly variable customer service that will eventually drive you to drink" you've got a pretty good idea of the ambiance of the "new" CompUSA.

My most surreal (as opposed to frustrating... heh) experience there in recent memory was the time a year or two ago when I was standing in the checkout line, and skimming the heaps of random stuff in the "impulse buy" bins. Right next to the $10 no-name MP3 players, $3 thumbdrives, and highly caffeinated energy drinks was a pile of $100 AMD Phenom quad-core CPUs. W...T...F!

Re:Hmm...

[penguinchris]

Sounds like Fry's. A terrible, terrible place, but great for "geek emergencies" and for browsing the random and sometimes interesting things they stock. And they claim to match *any* internet price, so there's that. Just don't make eye contact with the sales people.

Re:Hmm...

[Just Brew It!]

Hey, at least at Fry's you can buy oscilloscope probes, discrete LEDs, resistors, etc. Now that Radio Shack has morphed into a glorified cell phone store, it is good to have a B&M place to get that hard-core techie stuff when you need it NOW! (Well, they had that sort of stuff the last time I set foot in a Fry's ~3 years ago; not sure if they still have it today.)

Time to...

[Lisias]

... activate that old and faithful hard disk compressor. (Remember Stacker, SuperStor and DriveSpace?)

I thinking if it's not a good idea pushing on-the-fly data compression on the Linux EXT4 kernel drivers... (apologizes if it's already there, by AFAIK it's a ext2 extension).

I'm happy I already brought a pair of 2TB hard drives not so long ago. I would be really screwed up, as the old 1.5TB pair is not enough for all that PR0N I downloaded.

(Speaking seriously - is this really what we want? Focusing every bit of hardware on one single source? Shit happens everywhere, every time - are we going the right path on this extreme geographical source of goods dependency?)

Re:Time to...

[optimism]

... activate that old and faithful hard disk compressor. (Remember Stacker, SuperStor and DriveSpace?)

Your 2TB hard drive is probably filled with video, audio, or image data that is already compressed (both lossy & lossless, via mpeg, mp3, jpeg, etc). A disk-level compressor will do nothing except slow your system down.

Speaking seriously - is this really what we want? Focusing every bit of hardware on one single source? Shit happens everywhere, every time - are we going the right path on this extreme geographical source of goods dependency?

Here are your choices:

1) Pay $50/TB for storage, and plan ahead so you always have enough storage for the next few months.

2) Pay $50/TB for storage, usually, unless the factory has a disaster that bumps the price to $100/TB for a couple of months, and you have to buy storage right now because you did not plan ahead.

3) Pay $100/TB for storage, always, from a manufacturer who operates redundant factories with overcapacity.

Personally I would choose #1.

Re:Time to...

[Lisias]

Your 2TB hard drive is probably filled with video, audio, or image data that is already compressed (both lossy & lossless, via mpeg, mp3, jpeg, etc). A disk-level compressor will do nothing except slow your system down.

The new 2TB ones, yes.

The old 1.5TB are in "production" on some general use computers running linux. One of them mainly used for software development. I think I could made good use of data compression on my SVN repositories.

Re:Time to...

[optimism]

The old 1.5TB are in "production" on some general use computers running linux. One of them mainly used for software development. I think I could made good use of data compression on my SVN repositories.

Raw source code could be compressible...but I'm quite certain that you don't have that much code.

Let's say for example that you personally maintain a source base with 10 million lines of code. This is equivalent to the entire Windows NT4 source base, which had hundreds of software developers, plus many IT drones managing the code repositories.

Let's also be generous and assume that your average line of code is 80 bytes. So, your entire source-code base, uncompressed, would be 800MB. Less than one gig.

Let's further assume that you change a whopping 1% of this source code (100,000 lines committed to SVN) every week.

Even with those silly-big numbers, it would take you more than 3600 years (a very optimistic 45 lifetimes) to fill your 1.5TB drive with source code.

Code is tiny. If that drive is full, it is mostly filled with compressed multimedia (video, audio, image) files. Not compressible code.

Moral of this story?

[Stan92057]

Moral of this story? Wait until the prices come down if you can.

Re:Moral of this story?

[optimism]

Moral of this story? Wait until the prices come down if you can.

Alternative moral: Always have enough spare storage to make it through a 3-month price hike.

Don't make them in unstable Third World countries.

[sethstorm]

You're asking for trouble when you've got factories in a region that is prone to flooding *and* civil conflicts.

Perhaps closing that First World factory wasn't wise after all.

Re:Don't make them in unstable Third World countri

[whatevs]

I wouldn't really say the region is "prone" to flooding since there hasn't been flooding like this in over 50 years. Last time I checked, the US was frequently ravaged by hurricanes, earthquakes, tornados, and flooding.... and union strikes. Besides, Thailand's civil issues haven't effected their manufacturing at all. Those red vs yellow protests are only a few thousand people.

No kidding

[Sycraft-fu]

I dislike when people try and pretend that they feel the loss of every human life with the same tragedy. No, you don't. If you did you'd never accomplish anything because when you lose someone close to you it is amazingly tragic, and people die literally every second for all kinds of reasons. You just don't feel the same. The closer someone is to you, the more it matters.

The reason we feel for large tragedies is because of the scale. When hundreds of thousands die, we feel the scale of that, even if we knew none of them. It is that so many die.

As you said, 300 lives lost is nothing. That doesn't mean each individual life didn't have a great deal of value to their communities, it means that on a global scale it is trivial. WE lose more than that every day globally and you don't like about it. Heck we lose more than that to natural causes in short order and you don't think about it.

Don't pretend like the loss of 300 lives matters to you because it doesn't. It matters to the friends, families, neighbors, communities, etc of those people lost.

When an old man in a country I've never been to who I don't know dies, I am not even aware of it. Even if you told me my response would basically be "Oh." When an old actor dies that I know from the movies only I think "That's too bad," but not a whole lot more on it. When a friend's grandpa died that I had met, I was saddened. When my grandpa died, I was quite broken up.

It is all a matter of how close I was to the person, how deeply they touched my life. That is how everyone works, how we must work. As the parent said, we have a limited amount of emotional reserves. We cannot mourn every loss to the core of our being.

Time to buy TAPES!

[paranoidd]

Sure thing they are not a replacement for hard disks, but it's just worth mentioning that nowadays they can be mounted as a regular file system and hold up to 1.5TB (not considering hardware compression).

I bought just in time.

[EmagGeek]

Samsung F4 2TB drives went from $80 to $110 overnight. I'm glad I bought two of them a couple of weeks ago to grow my array.

Let's hope they can get things back up and running soon.

Re:Don't make them in unstable Third World countri

[King_TJ]

Yep... exactly. Or at least spread out the production so you have plants all over the globe in strategic areas.

I agree something fishy with those stats.

[LostMyBeaver]

I was paying $21 per 1meg SIPP one day and three days later, I was buying up 1meg SIPPs at $95 and the following week selling them for $125. To do it, I asked my dad if I could use his credit card. He handed it to me and said "You better pay me back". Then he got a bill for $20,000 and I handed him the cash. I still had a nice chunk for myself.

That was a fire that caused that situation...

So I don't know about the quoted prices on that site...maybe they were the wholesale prices... but the retailers were certainly much higher than that.