Slashdot Mirror
Hard Drive Prices Up 150% In Less Than Two Months
zyzko writes "The Register reports that hard drive prices (lowest average unit prices) have rocketed 151% from October 1 to November 14th. The worst days have seen over 5% daily price increases. This is commonly attributed to the floods in Thailand, but there are concerns of artificial price fixing and suspicion that retailers or members of the supply channel are taking advantage of the situation."
The number varies when you break it down to individual drives, but it seems to be in the right ballpark. Anecdotally, the drive I picked up on Oct. 14th would cost me 135% more today. The flood waters in Thailand have partially receded, but aren't expected to be completely gone until early December. The damage to the country's economy and property is measured in the tens of billions.
They aren't up 150%.
They're up 400%.
Never thought 500 GB drives would come back into style...and yet they're what my friends are specc'ing into their machines these days.
I am John Hurt.
I'm too lazy to look it up but the figure I remember seeing is that 25% of the world's hard drive manufacturing capacity has been impacted by the floods so the markup shouldn't be anything like 150%. It's just like the time RAM prices went thru the roof years ago, far higher than should have been caused by whatever problem caused a temporary shortage and they stayed artificially inflated for years. Same thing's going to happen with hard drives. Manufacturers will milk this for years.
One advantage of all of this is that SSD drives will start to look more attractive price wise. To me, this is a good thing as people start purchasing SSDs the price will start coming down as the cost of components get more commoditised. I would not mind seeing spindle hard drives being a relic of the past.
"Be particularly skeptical when presented with evidence confirming what you already believe." -
This is the reverse situation to a new product hitting the market. When LCDs or Plasma screens first came out, they were basically unaffordable by anybody except the richest people and companies, now everybody has one.
This is the same situation in reverse - the production capacity fell and the demand needs to recalibrate the prices.
Of-course don't forget that there is a fixed cost associated with rebuilding the factories and all the new equipment and tools now are more expensive, given so few harddrive manufacturers even exist and all of the inflation that's rampant in the world.
If the price holds, it sends a message to rebuild the production and maybe add even more, clearly there is unfulfilled demand at lower prices.
You can't handle the truth.
prices are up 300%. I work at a B2B-reseller and the 1TB Western Digital Caviar Green which was 0.05€/GB in September is now up to 0.16€/GB. Other drives are similar. Some drives have even seen 400%.
hard drive prices (lowest average unit prices) have rocketed 151% from October 1 to November 14th... The number varies when you break it down to individual drives, but it seems to be in the right ballpark.
(emphasis mine)
Yes, I'm glad we have rediscovered what it means to find an "average". [facepalm]
Price fixing is nothing new in the manufacturing world. I would not be surprised one bit. In my case, I've made a very simple and rash decision: I'm not buying any hard drives until prices come back down to normal. A SAS expander I built two months ago for $15k would now cost $30k. My clients aren't going for that, so I'm waiting it out.
The manufacturers knew what they were getting into, when they built their factories on flood plains. The burden for that mistake should not be born by the customer.
-Billco, Fnarg.com
The main reason is because of the floods at WD, the only major supplier of heads is Seagate in Derry. They are pushing up their prices to the makers because they can because demand is higher on them. A temporary blip because WD will be back up and running soon (i.e. by the end of 2012). Still, SSD's don't have the reliability nor will the increased price of HDD's scare people off, SSD's are still expensive.
Wait. Is it legal to sell 5900 RPM HDs? ^_^
I am John Hurt.
As a Seagate reseller in Canada, our cost on the most popular model we sell is up 191% (roughly triple). Seagate didn't even have a factory in the flood. WD (who did) is typically even higher, and many models simply can't be bought anywhere for any price.
Yeah, and instead of paying +150% for months, we could pay +300% always.
Dilbert RSS feed
There is no such thing as artificial price fixing.
If there's a limited number of suppliers in a market, they can (and do, often) collude to keep prices at a certain level. It's perfectly natural to call that "artificial price fixing". In a perfect market, they would be replaced by a competitor whose price was closer to the marginal cost of production - but that's not how actually economies work.
I suppose to an extent, your interpretation IS what's taught in Econ 101 (assuming Econ 101 is "General Microeconomics" at your school, and focuses on theory), but that isn't the end truth or something. Price fixing is a concern in real market economies - and often it's shortages like this that effectively give cover for companies to try it (you see this all the time with oil/gasoline prices).
Let's not stir that bag of worms...
Or by March 2012, tops.
Personally, I'd rather take the estimates of people doing their best to fix the problem...
Plant managers at Nidec Corp. (6594), which makes motors for disk drives and also has a factory at Rajana, decided not to wait for the water to subside at its seven flooded factories. According to company spokesman Masashiro Nagayasu, they cut a hole in the roof of the Rajana factory, sent divers into the toxin-laden waters to unbolt some heavy equipment, and lifted it onto waiting boats. Some of the equipment is now being used in Nidec factories in China and the Philippines.
...than of CEOs like Seagate's Stephen Luczo who are gleefully rubbing their hands together at the price hike, predicting a year-long shortage of hard-drives.
"People are going to appreciate the complexity of this business," he says.
Mit der Dummheit kämpfen Götter selbst vergebens
Is any of this surprising??? A caribou in Alaska passes gas and ALL gas prices jump forty cents in the US (of course there's no price fixing or collusion going on.) In 2000 Enron screwed with the supply of electricity to the western US, precipitating the Dot Com crash (the tech bubble sustained the collapse, but it was the rolling black outs that started massive business failures.) Enron's affiliates were able to bump prices to mind numbing levels, then got caught with internal memos laughing about how they reamed California for billions. An article comes out that oat bran reduces cholesterol and suddenly a bag of granola needs to be stored in a bank deposit box.
We are haunted daily by "Whatever the market will bear...", which is just code for "The piggies are at the trough and if I don't gouge out a piece for myself I'll miss out on the feeding frenzy." Sadly it has become the norm. Our society has put profit ahead of everything, ahead of dignity, compassion, even sanity. We've been caught in a terrible race to the bottom. This is why we debate about the sane limits to gutting economies and ecosystems. Because somebody, somewhere isn't yet done raping what remains of some vital resource.
Perhaps its time we acknowledged the darker aspects of primate behavior and started designing our society to limit the damage they can do. Checks and balances were expressly designed into our government to limit the dangers of concentrated power. Sadly we've allowed power to concentrate elsewhere and the wisdom of our founding fathers now ring louder than ever before. Corporation is the failure and its time to put things right. The price of drives is just a blip on a landscape of unbridled greed and avarice destroying the very things that make life worth living.
Tell the truth, that's a bit of a lie though. Those people in those factories are paid nearly US wages, more so if you compensate for them wasting manpower 2-3x what US companies do.
The bigger issue is investment dollars. They got to build these plant for pennies on the dollar with little to no oversight and the governments picking up a huge part of the tab. It was about investors chasing that quick 20% turnaround. Of course now the money-losing part of the industry is moved so its cheaper to build where factories are already at.
The US isn't that much more expensive. At my company, we beat our Brazillian counterparts in $$/worker that more than accounts for wages. Of course the bigger costs are energy and materials... Which of course are barely subsidized (and hijaked buy the same investors that move things out) there versus other countries.
Something I noticed for the last three weeks was the absence of hard drives specials or sales in the weekly adverts from retailers like Fry's electronics.
When newegg sent out their "November Madness" and "Black Friday" emails to subscribes, there was *not a single* hard drive to be found in the sales.
Normally I'd try for a witty or insightful comment here, but I just don't have much more to say as I don't know if it more due to profit taking on the retailer's part, or if they are more concerned about running short/out of supply in the near future.
Just to add to the parent, you also have to factor in contractually obligated allocations. Western Digital and Seagate already signed contracts with OEMs for Q4 (if not beyond) - at this point they're locked into selling a specific number of drives at a specific price. Short of going bankrupt, breach of contract is rarely the better option.
So while there may be a 25% shortage overall, what we're really looking at is supplies and prices in the retail market (anyone selling "retail" drives), and the spot market (OEMs, white box builders, and e-tailers like Amazon that sell "OEM" drives), the two of which are for all intents and purposes the open market. The result of those OEM contracts means that the entire 25% shortage needs to be absorbed by the open market. And since most hard drives are sold on contract to OEMs in the first place, the actual shortage in the open market is easily 50% if not more.
This compounded with the portion of drive sales that are inelastic, and some dealer panic/greed are what has driven up prices so high. 150% in these circumstances is quite high (and there's no getting around that), but it's completely rational for such a major shortage.
If it makes you feel any better, the OEMs will be getting screwed when they start their new contracts. At that point the OEM and open markets will be back in equilibrium - OEMs won't be able to suck up drives for cheap - and the shortage will be better shared by both parties. Drives will still be expensive, but they shouldn't be quite as expensive as they are now.
Although I don't have the specific knowledge of WDC and Seagate contracts you profess, many/most contracts have "outs" for act-of-god situations, which would apply here.
"National Security is the chief cause of national insecurity." - Celine's First Law
Expect it to take a long time for prices to come down to the 'old' levels again: We're down to just three harddrive manufacturers in the world now, and only two of those make 3.5" drives.
- Western digital (which just got the greenlight to acquire the Hitatchi HDD division)
- Seagate (which took took over the samsung HDD division)
- Toshiba (which only makes 2.5" HDDs)
The only real pressure to drop prices again would come from competition with SSDs, and those can't compete at all in in TB-range
Now, if you are in the market for a new HDD, your current best bet is to look at the brick and mortar department stores: Much of their remaining on-the-shelf stock hasn't caught up to the rapidly raises prices yet, which currently makes them a lot cheaper than online vendors... Provided you can still find them. Earlier today I saw a bunch of 1.5TB western digital elements drives on the shelf in Target for $79, while Amazon.com wants $129 for the same drive. 2TB for $89, instead of $159. But with the christmas shopping season starting, I'm sure that the department stores will run out of their cheap stock pretty soon.
Although I don't have the specific knowledge of WDC and Seagate contracts you profess, many/most contracts have "outs" for act-of-god situations, which would apply here.
Yes, but to invoke "force majeure" - as I know it best - you must be truly unable to supply. You can't just bail on your OEM contracts because it'd be more profitable to sell them on the open market, so the open market has to absorb the whole shortage first and only then, if you're still unable to supply the OEM market can you invoke it. The OEMs would probably also have rights to a delayed fulfillment so any backlog must be cleared first before they can supply the rest of the market. So while what you say is true, it doesn't really change anything the GP said. It really only shields the HDD manufacturers from liability due to breach of contract.
Live today, because you never know what tomorrow brings
"Act of God" is a legal term. It has a very specific definition, which oddly enough, does not take into account God's actions as part of the definition.
https://en.wikipedia.org/wiki/Act_of_God
An act of God is an unforeseeable natural phenomenon. Explained by Lord Hobhouse in Transco plc v Stockport Metropolitan Borough Council as describing events;
(i) which involve no human agency
(ii) which is not realistically possible to guard against
(iii) which is due directly and exclusively to natural causes and
(iv) which could not have been prevented by any amount of foresight, plans, and care.
A bubble is when prices, demand and supply all rise at the same time. Prices going up when supply is reduced with demand staying the same or dropping slightly is just how a marketplace works.
Just about everybody it seems :(
Not only is it quite legal, I (and many others) swear by WD's "Green" hard drives. They're at least as fast as my previous 7200RPM hard drive, and run damn near silent, and very, very cool, even without any attmept to cool them. Unlike Seagate drives, WD HDDs also support acoustic noise management, dropping the already damn quite drives down another few decibles.
They're not just perfect for DVRs, either. If your primary drive is an SSD, you likelydon't need crazy seek time on your secondary bulk storage, and low power, longevity, and nearly no noise is a great feature.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
And yes, drive supplies will rebound because of one fact - a 2TB spinning rust costs way less than a 2TB SSD, and since drives are going 3TB+, I don't see SSDs catching up until drive size expansion slows below Moore's law. (SSD's fundamental capacity is driven by Moore's law - double the transistors in 18 months - double the capacity - SLC or MLC).
That's an interesting point—that SSD capacity is driven by Moore's law, but spinning disk drives are not. If that's true, you might think that SSDs would overtake spinning platters in a few years, wouldn't you? So platters would be out and SSDs would be the ubiquitous storage medium that hard drives are now. (I realize that this point is tangential to your main comment, and that you didn't actually assert it strongly. So I'm not really arguing with you—I just find the idea interesting, and wanted to spend a little time thinking about it.)
So when will solid state devices overtake mechanical hard drives? The first thing to consider is that while mechanical drives are not subject to Moore's Law, this technology has had an extraordinarily long life, marked by a pretty amazing growth in data capacity, accompanied by a dramatic reduction in size and power requirements, as well as an increase in I/O rates and a steep decline in prices. Being lazy, I just took a look at the Wikipedia article on the history of hard drives. It's a pretty amazing story.
When they were first invented at IBM in 1956, disk drives had a capacity of 5 Megabytes, and were the size of about 6 or 7 full-size refrigerators placed back-to-back. (See the Wikipedia image of this device.) About 10 years later, IBM's multi-platter drives were up to 29 Meg. This is not quite what you'd get from a device that follows Moore's law, of course: disk drives grew in capacity a factor of 6; Moore's law would have dictated that they increase by a factor of about 20 over the same 10 years.
However, the growth between 1970 and 1980 was more spectacular. In 1970, the biggest IBM "disk pack" had a capacity of 100 Meg. By 1980, we were up to 2.52 Gigabytes...a capacity increase of about 25 times—a growth in excess of Moore's law!. Significantly, the 1980 device was down to the size of a single refrigerator, and only cost $40,000.
The Wikipedia article has a graph that plots the growth in capacity of hard drives between 1980 and the present (2011). According to the graph, hard drives have increased in capacity at the rate of about 100 times every ten years. Wow.
Actually, I could have saved myself some time (and painful arithmetic) by just finding the article on Kryder's Law first. Mark Kryder published an article in Scientific American in 2005, in which he asserted that hard drive capacity doubles annually. From the article:
So maybe the answer to the question, "When will solid state devices replace disk drives?" is, "never"!
My own experiences incline me to be skeptical of claims that hard drives will be replaced any time soon by something totally different. Back in 1982, when I first decided to make my living "doing stuff with computers", I took a Data Processing 100 class at the local junior college (hey, tuition was cheap, as I was teaching Philosophy at the same institution). The textbook for the course asserted that while spinning platters were now the best method of online data storage (you put all the stuff you didn't absolutely need to ac
Great men are almost always bad men--Lord Acton's Corollary
I'm just amazed that for the first time in my entire life I'm on the RIGHT side of a price shift! I've always been the unlucky bastard that bought the $200 drive that ended up $80 two weeks later. the bitch is if Samsung hadn't have sold their HDD business i'd probably be screwed right along with everybody else, but when i heard they were gonna be gone and saw 1Tb EcoDrives for $35 and 2Tb for $65 I went ahead and bought me 6Tb worth of drives just so my desktops would all be Samsung. I just looked online the other day and a refurb 1Tb Samsung was going for over $100 so all I have to say is....yay me! For once i didn't get shafted on the price, woo hoo!
Never thought I'd be able to sell those 200Gb drives I had sitting in the shop but when folks saw how quick the price was jumping poof! They were gone. As soon as I run out of these 80Gb drives it'll probably be SSDs until the hard drive mess is over. if the customer wants a big drive I hope they have a big wallet! Funny though that in some places like geeks you can still get external drives at an okay price....whoops! Spoke too soon, now the 1Tb refurbs are over a $100. Man TFA is right you can almost watch the price jumps just by refreshing your browser. Can't believe the 500Gb are going for $80 a pop, wow....yay me! i gots tons of space!
ACs don't waste your time replying, your posts are never seen by me.
Those washing machines (disk drives) would jump around like a washing machine with the load all on one side during back ups and several other operations. I was amazed that the heads didn't strike the platters the way those things jumped around. All heads moved in unison during these operations and at that speed they had a lot of momentum.