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HDD Price Update: How the Thai Floods Have Affected Prices, 3 Months Later
New submitter jjslash writes "The hard disk drive supply chain was hit hard late last year when a series of floods struck Thailand. The Asian country accounts for about a quarter of the world's hard drive production, but thousands of factories had to close shop for weeks as facilities were under water, in what is considered the world's fourth costliest natural disaster according to World Bank estimates. That's on top of the human cost of over 800 lives. TechSpot has monitored a number of mobile and desktop HDDs to get a better overview of how the situation has developed in the last three months."
the Asian country accounts for about a quarter of the world's hard drive production, but thousands of factories had to close shop for weeks as facilities
"and" would be better as "but" implies that there's some sort of twist.
NewEgg is actually having sales on something besides "recertfied" drives.
That is what we are dealing with. From HDs to gas prices.
I want to know how much its going to cost me to stash another TB worth of shit music, porn, and absolute garbage movies and tv shows god damnit!
About sales going down, while prices are going up. In hundreds of $
Those pesky customers, always making problems in free market. Market would do infinitely better without them.
http://opencm3.net, http://www.nongnu.org/gm2/
I see folks are expecting prices to get better, but just watch...
The initial price shock from speculation, panic-buying and hoarding may be coming down somewhat, but as the article alludes towards the end, the real impact might last throughout this year. There haven't been actual shortages on that many products so far, and when real shortages show up prices could stay high or go higher even with people cutting down as much as they can on drive purchases. (I know several popular and/or performance drives have sold out at PC makers, especially on their build-your-own websites, but most products never ran completely dry.)
Not to mention that while vendors have a lot of tactics for dealing with shortages, from back-stock to supply contract clauses entitling them to extra shipments of already manufactured inventory during crises, none of those tricks can't make new hard drives appear out of nowhere. The wiggle room such tactics enable will be drying up about now. Eventually even commodity drives could feel the squeeze as supplies on more and more drives threaten to run out entirely, despite the high prices. Because there's a lot of pent-up demand and it sounds like many of those plants still aren't nearing full capacity again.
The Thai floods also disrupted the supply chain for digital cameras. It would be interesting to know how things are doing on that front.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
Prices are still high, but not as much as they were at the peak last November. Instead of 80-190% above the pre-flood prices, they are now 60-90% up.
This probably should've been part of the article summary.
It is not wise to keep all your eggs in one basket. But it is probably too much to expect common sense from the hard drive industry.
25% isn't "all the eggs". Not even close.
I think lots of people don't understand what happened with Newegg and other retailers. As someone explained it to me, a drive maker like WD has two kinds of customers:
1) big systems integrators like Lenovo, Dell, HP, etc., who order 100K drives at a time or more
2) Smaller customers (e.g. resellers) like Newegg, who order maybe 1k drives at a time. If someone wants just 5 drives they have to buy from a distributor or retailer like Newegg.
The very big customers will order their 100k drives at some preagreed price, delivered over (say) a 3-6 month interval per their production schedules. WD also plans its own production around such large orders. If they get (say) 1 million drives worth of such orders for 1Q2012, they'll (normally) set up their production to make (say) 1.3 million drives, deliver 1 million of them per the pre-agreed contracts, and put 0.3 million on the shelf for to fulfill "spot market" orders from places like Newegg. Depending on market conditions and what the competition is doing, the spot price will fluctuate above or sometimes below what the big OEM's pay.
When the Thai floods hit, production was cut from (say) 1.3 million to 0.9 million. There was no way to fulfill the agreed contracts, understandable due to the disaster, but they had to make the best effort they could, which meant hand ALL their drives over to OEM's while the likes of Newegg got nothing. So the prices of integrated systems actually didn't jump that much, but spot prices skyrocketed.
Now that we're a few months into the drama, the OEM's are in a new ordering cycle, they get to pay higher prices too, but WD gets to again allocate some drives to spot inventory. So we'll be seeing higher prices from Dell over the coming months, but some relief on the Newegg side (though the prices will still be higher than before, until around 3Q or 4Q from what I keep hearing).
Western Digital and Toshiba had factories in the flood zones whereas Seagate was mainly affected by the resulting supply constraints from business partners who were forced to halt production of related components. Among those was Nidec, which produces ~70% of the world's hard drive spindle motors.
You'd get the same thing in "first world hellholes", only that the reason for production going down would be due to strikes and general laziness rather than natural catastrophes. Which, in addition, happen in first world countries as well occasionally.
Bitten Apples are still better than dirty Windows...
Huh? The manufacturers aren't legally forbidden from selling you 3 drives if that's what they want to do. They just don't want to deal with running a retail operation. It's just like if you call a shoe manufacturer like Nike and say you want to buy a pair of running shoes. They will refer you to a shoe store, since they don't want to deal with smaller quantities.
Also remember that the OEM contracts were significant in the above picture because they were agreed BEFORE the floods, and locked in pre-flood prices that stayed in force for months after the flood. So even if WD were willing to sell you 1-2 drives directly, you would have had to order before the flood to get the low price. After the flood, if they had inventory to sell you that hadn't already been committed to other customers, they would have charged market prices the same as Newegg did.
I live in Thailand and ever since the floods, it has been used as an excuse to keep prices up. Examples of this would be beer, eggs, maama (think instant noodles) and also Hard Drives!
If you've ever lived here, you know people try to outsmart everyone and an example of this would be claiming shortages of hard drives is keep prices high even known their supply chain in Ayuthaya (where most of this shit comes from) has been bone dry and their factories operating at capacity for at least 6 - 8 weeks.
Mind you, when I go to my IT Square near where I live, only a few days ago Hard Drive prices are relatively back to normal, yet overseas, are still super expensive compared to normal. Also Nikon cameras and glass are normal prices here (most DX DSLR's and glass are made in Ayuthaya) and again OS it's still more expensive than normal.
This is a technical site for geeks and nerds, we simply don't need to cover that side of the story, it's been done elsewhere. The reality is, as nerds this is the important part to us. You can say we're emotionless or cruel or some other such word but those are the facts, it's a technical site, with technical news. If you want coverage of the other impact you need to look elsewhere.
This is a case of the middleman not being at fault. The OEM's buy in bulk, the manufacturers encourage that with discounts. That seems entirely reasonable. Sometimes "not going the way you like it" does NOT in fact directly translate to "evil is afoot". In this case, a natural disaster impacted supply in a way that changed prices. Now prices are edging back to the norm. Some middlemen might have raised prices (and evidence of fixing in relation to this disaster, if found, should absolutely be used to prosecute to the fullest). But in the absence of such evidence, there doesn't seem to be a clear bad guy (aside perhaps from not being properly prepared for a natural disaster).
how is this for a reason:
drive manufactures DO NOT WANT TO SELL TO YOU because your 2-5 hard drive order is insignificant for them
they do want to sell to newegg and anybody else willing to purchase few thousands drives so you and few thousands more people could gather up and make one big order and split drives among yourself (it would actually end up more expensive that way than buying from neweg, but nobody is stopping you from doing that)
I think that's needlessly critical. Of course there are great human disasters which don't fall under the umbrella of /. Just because this happened to be one which also has a major affect on the tech industry, doesn't mean the humane part of this is any less tragic. Still, people come to /. for tech news, and this is an interesting analysis on how the price of the drives have been affected, and that is what /. should report.
Lumping everybody together as basement-dwelling cold-hearted bastards who only care about cheap hardware is just as narrow-minded as you claim people reporting/reading this are. In fact, from my experience it seems that people reading /. are often more aware of international social issues than average.
Among those was Nidec, which produces ~70% of the world's hard drive spindle motors.
Single supplier, but not single site. Their web site says they have plants for spindle motors in Thailand, China, Indonesia, The Philippines and Vietnam. True, the 6 plants listed are all in Thailand but the implication that 70% of the drive motors are made in Thailand is false.
Live today, because you never know what tomorrow brings
Redundant Array Of Inexpensive Asians ? :)
What? I agree that Slashdot sometimes ignores stuff that matters a lot, but this was covered, and there were a bunch of followup posts on Slashdot too.
If you are suggesting that people on Slashdot don't know about this event, you are delusional.
Also, I'm not going to take a bike ride in -26C, but if you want to take one in your cozy first world climate, be my guest.
No one is preventing you from buying direct, they just have minimum order quantities. Are you suggesting that it would be a good idea to make minimum order quantities illegal? If you legally required them to single hard drives in single units they would just set the price absurdly high anyway, and give big discounts in quantities over 1000. Would you then suggest that the government legislate sales prices to manufacturers? In an industry that is constantly innovating and lowering prices and generally works very well? Why?
"Besides, arent hard disk prices saner in Australia?"
Yes but their drives wont work here. the platters spin the other direction.
Do not look at laser with remaining good eye.
The more reason to legislatively block such a restriction, and allow direct sales to cut the middleman/resellers out.
Its allowed. There is no restriction.
The fact that they dont want to do business with people keen on forcing them into the retail business does not amount to a market failure. It amounts to a liberal, with a raging hard-on for the theory that business is evil, being given a subject to talk about that inevitably proves exactly how ignorant he is.
"His name was James Damore."
They do already. But if you're buying 3 drives then you're going to - proportionally - pay a lot more in handling charges. In terms of manpower, it costs about the same (actually, a bit less) to put a load of drives on a pallet and load them into a van as it does to get three drives off the production line and ship them to a single address. If you turn up at the factory, a lot of these places will happily sell you drives quite cheaply, but if you want them to ship them to you then you have to cover their costs. This cost is a lot easier to absorb when it's split over 1,000 drives than when it's split over 3.
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Seagate had almost record profits this Quarter. WD did VERY good despite the flood.
Looks like the only one hurt was consumers, Corporations made out like bandits.
Who logs in to gdm? Not I, said the duck.
Back in the 80's there were a few manufacturers who also had a direct retail channel. What they did was constantly sell everything at a rate higher than what any retail store was selling it for. It made it really easy for them to maintain their focus on manufacturing instead of on retail. Of course, it didn't give you the extremely cheap option that you envision yourself as suddenly getting when the manufacturer would sell to you directly, but hey, you got what you asked for. You'll probably say this doesn't pass your end user non-discriminatory clause but the only way you can really claim that is if you were to go to the manufacturer and offer to buy the same amount of drives with the same frequency as an OEM and not get a similar if not identical price.
Generalizations and assumptions, Slashoogle at it's best. See http://web.mit.edu/krugman/www/smokey.html.
Bitten Apples are still better than dirty Windows...
We know that Apple is able to make some special deals with their suppliers due to them paying in advance or something like that, what I'd like to know: is anything known if (I suspect no, cause Mac prices seem stable) and if not, why they aren't affected by this?
There's a flaw with that argument - it's easier for them to collect on the insurance and charge absurd sums to rebuild and retool than to do the job properly the first time.
Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
. I'm only cutting out the middlemen that have largely made things worse.
You are so ignorant of a liberal that you actually think that waving your hands and saying something is equivalent to a reasoned, well thought out, argument.
You have not proposed to cut out the middle man. You have proposed that the factory be required to set up a very large warehouse to replace the entire worlds product buffer so that it can directly field your request for 5 drives.
"His name was James Damore."