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Hard Drive Shortage Relief Coming In Q1 2012
MojoKid writes "According to new reports [note: source article at DigiTimes], global HDD production capacity is getting ready to increase to 140-145 million units in the first quarter of 2012, or about 80 percent of where it was prior to when the floods hit Thailand manufacturing plants. HDD production was sitting around 175 million units in the third quarter of 2011 before the floods, after which time it quickly dropped to 120-125 million units. Since then, there's been a concerted effort to restore operations to pre-flood levels."
It's great that HDD production is about to increase again, but I think the recent "crunch" was also a good thing in a way. Perhaps it encouraged some end users to get more creative with data storage techniques, resulting in more efficient systems that can do more with less bulk storage capacity. At least I can hope so.
Write failed: Broken pipe
Granted, the drop in supply was more abrupt than the restoration of supply, so one would expect prices to follow the same curve.
It may be too much to hope that this leads to more geographic diversity in manufacturing, but I hope it's at least produced some lasting acceleration toward solid-state storage.
It's not all their fault, really. MSPaint doesn't have JPEG support in Windows 98.
...but, what's keeping 4TB internal drives off the market?
The 4TB Deskstar has been out for a while...where are Seagate and WD?
The government has a defect: it's potentially democratic. Corporations have no defect: they're pure tyrannies. -Chomsky
Uhhh... unless they're using some new calendar I'm unfamiliar with, the first quarter is about two-thirds over. The fact that they're using the future tense for something which is already mostly gone makes me wonder just how well informed this article is.
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I do not like Microsoft. Remove them from my email address.
...how does a production shortfall of less than 50% result in a price hike of *over 300%*??
This curve should explain it: http://en.wikipedia.org/wiki/Supply_and_demand
"I zero-index my hamsters" - Willtor (147206)
Has there been any data published about the reliability of the drives coming off of the assembly line now? When the drive makers reduced their warranties, there was concern that production after the flooding would have a drop in quality. Has this been borne out, or was it unfounded speculation?
1. Big OEM contracts agreed long in advance takes priority, so everything had to be absorbed by the spot market which is much smaller.
2. If you don't have a HDD, you practically can't sell a new machine and for many commercial services not buying is not an option.
3. As smart people in the market realize what was about to happen, they made sure to buy now "just in case" emptying the market.
4. Even OEMs started to fear the shortage and started buying HDDs in the spot market as insurance.
Sum of all of the above = it probably took a 300% price hike until sales dropped 25% to match supply. Spot sales probably had to drop 50-80% for that to happen.
Live today, because you never know what tomorrow brings
The floods caused, what, hundreds of millions of dollars worth of infrastructure damage? Who's ultimately going to write the final checks that pay for all the repairs (and likely upgrades)? Don't we know who? It will be every person and company that buys those products and the population of Thailand. Ultimately the entire global economy pays the bulk of the cost. The One Percenters who control those factories damned sure aren't gonna foot much of the bill. So... don't be a fool and expect prices to return to where they would have been otherwise. That will take a decade.
(It's exactly how recessions work: One Percenters feel a pinch in their ability to concentrate wealth, and in a perverse reversal of the Trickle Down theory they make all those they employ suffer instead so that they regain the full extent of that ability. The only difference in this case is that the proximal cause is an obvious natural disaster. Economists have been feeding us lies about such things for decades.)
Just to elucidate, a x% reduction in amount of HDDs does not translate into an x% increase in price (which is impossible since the units are different). It results in an x% reduction in number of people who can buy HDDs.
Pretend that 100 people want to buy one HDD each. If there are only 50 identical HDDs, that doesn't mean that the price goes up 50% (or 100%). It means that only 50 people can buy HDDs. The other 50 have to go without.
Sort everyone by how much they're willing to pay for a HDD, from lowest to highest. Then the highest price that the 51th person is willing to pay for a HDD is the new market price. If he's willing to pay just 10% more, then the price for HDDs goes up 10%. If he's willing to pay 300% more, then the price for HDDs goes up 300%. His price is higher than the first 50 people are willing to pay, so they choose simply not to buy a HDD at his price. Consequently there are only 50 people left who want to buy HDDs, and only 50 HDDs for sale.
Skyrocket the moment they think supply is threatened and then fall back down glacially while waiting for the next disaster or crises. Supply may increase as production ramps up but I'm betting that the middle men and manufacturers will keep prices high for as long as they can. Some manufacturers apparently didn't suffer the same losses but jacked prices up too so this should be no surprise at all...
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Unfair? How would you like to apportion them?
In a resource shortage, yes, the very wealthy can always get what they want. Here's a hint: the very rich can always get what they want, period. They're rich. In the worst-case scenario, they can bribe whoever is in charge of things. Hard drives, however, are both a consumer product and a business product. Business products are valued much more highly, for good reason - they are the tools you use to make money. Practically, the price increases led me to use a spare 1 TB HD to build a DVR, instead of buying a 2 TB drive. In a year or two, I'll get a 3-4 TB drive for a price I feel is fair, and in the meantime someone's company has gotten a 2-3 TB drive to use for their database.
Yes, we'd be in a much worse one.
For example, there's the round robin method. Put 100 people in a queue. The person at the front gets served and must go to the back of the queue afterwards. So the first time there's a shortage, people #1 to #50 get the drives. The second time there's a shortage, people #51 to #100 get the drives.
Another method is to pick 50 people out of 100 randomly and let them have the available drives. This doesn't require to implement a queue, but has a small chance of overlap in repeated allocations.
The point here is that fairness requires that all individuals are served equal amounts over their lifetimes, which can't happen in a market as the OP showed.
If you think about it, this problem also shows up in all modern operating systems. There are limited resources like CPU, memory, disk, etc, and the process scheduler has to decide how much time to give to each running process. How do they do it? They certainly don't use markets. What if they did? You'd have "rich" processes that hog all the CPU time, and you'd have "poor" processes that couldn't get any CPU time at all. It would be a crazy fun Linux kernel patch, though :)
Another funny thing about markets is how they invariably get replaced by rationing when the survival of a nation is at stake. When the German U-boat blockade of England in World War II prevented supplies coming in, the lowly, suboptimal, rationing method was more reliable and fair than free markets (Incidentally , it also prevented rioting and a civil war. What do you think would have happened if half a million of the poorest British subjects suddenly were unable to buy any food *at all*?)
Your other post approved round-robin. That just pushes the competition into the secondary market, where people realize that they got a hard drive worth $200 for $100. So they resell the drive, the cost to the business remains the same, but the transaction cost goes up. Great! UPS, FedEx, and the Postal Service win!
Rationing for survival is not more "fair" than a market. It means that the state provides goods at a price lower than their actual cost in order for the poorest to be able to purchase them. It's just another form of welfare, and is no more or less legitimate or fair for being so.
Sorry, I meant to reply to this. That point is somewhat irrelevant. The unfairness I'm talking about isn't that the rich are privileged. To be sure, it's distasteful, but not a fatal flaw on its own. The fatal flaw is that in a resource shortage, the very poor never get anything (in a free market economy). A fair system has to ensure that all the participants regularly get access to everything that's being traded.
Your example illustrates this perfectly. You forego access to a new 2TB drive, which leads you to change your behaviour, while a company with more money to spend on hardware isn't inconvenienced in the same way. But you implicitly accept that because you have faith that the prices will come down, and your projects are merely deferred in time. You expect to get something you want eventually, so you feel this is fair.
Not at all. There's nothing inevitable or deterministic in your suggestion. The secondary market isn't relevant to all the participants of the primary round-robin system. Most participants will use the hard drive they got for their own projects (that's why they joined the round-robin queue in the first place). A small fraction only will decide to defer their projects, and sell their drive on a secondary market.
The secondary market is more expensive, but clearly it's a fallacy to postulate that the secondary market somehow overrides or replaces the primary round-robin allocations.
Heh. Let me decode what you seem to be saying. The state ensures that all the population is able to obtain access to goods, and that is exactly as fair and legitimate as letting people die in the streets? Moreover, your argument seems to confuse the meanings of price and cost. In a free market, the price is determined by supply and demand, so actual cost is irrelevant. Why should the actual cost be suddenly such a big deal in a rationing system? You can't have it both ways. If you criticize rationing on the grounds that prices don't reflect actual costs, then you *must* criticize free markets on the same terms, namely that the prices determined by supply and demand don't reflect actual costs either. Finally, if *survival* is at issue, I'd say that rationing is a lot more rational than a free market alternative, irrespective of fairness, welfare or legitimacy.
You're thinking too short-term. Say the government forced manufacturers to keep HDDs at their original price and sell them via lottery. The 50 HDDs would sell out. The manufacturers would look at the how much money they're making per HDD, and conclude they don't provide enough profit for them to repair their factories. Consequently, next month when the next batch arrives, there are 50 HDDs again, and 150 people (the 50 who didn't get one last time + 100 new people) wanting to buy them.
Your attempt at fair HDD distribution means there's a constant shortage. Then one day, some of the poorer people who got a HDD suddenly realizes that he can resell it for a lot more than they paid for it. A black market appears. Lots of other people who don't need HDDs realize the price differential between your fixed price and the true market price provides an arbitrage opportunity, and they enter the lottery for HDDs. Now you have 50 HDDs being produced per month, and 5000 people wanting to buy them. So of the 50 HDDs you're selling via lottery, only about 5 end up in the hands of people who actually need a HDD, the other 45 go to resellers flipping them on the black market for a profit. So most of the people who need HDDs are actually paying the higher price despite your price fixing, and the extra money is going to flippers instead of the manufacturers so there's no incentive for them to fix your real problem - a shortage of HDDs.
OTOH, if you allow the market price to increase, it provides the manufacturers the resources and the incentive to repair their factories and increase supply. Other companies who used to make HDDs but scaled it back look at the higher price, and say hey, there's a lot of money to be made, we should start making HDDs again. Next month they make 60 HDDs, and the price creeps down. Next month they make 85 HDDs and the price drops some more. And the next back they make 110 HDDs. The 10 extra means people who didn't get a HDD in previous months gradually get theirs. Eventually everyone who previously wanted a HDD gets one. Next month there are 100 new people who want HDDs.
Now the reverse of the previous situation happens. There are only 100 people who want HDDs, but the manufacturers are still making 110. There's an oversupply. The manufacturers cut their prices below the 100-drive level to try to sell out their drives before their competitors can. The market price now settles at the lowest price the 100th seller is willing to sell for. The extra 10 HDDs carry over to the next month and now there's a 20 drive oversupply, driving the price even lower. Eventually some of the manufacturers see their dropping profit, cry uncle, and scale back production. The manufacture of HDDs stabilizes again at 100 per month, exactly matching demand.
This isn't a system which favors sellers over buyers. It treats both the same. Sellers are at an advantage when there's a shortage. Buyers are at an advantage when there's oversupply (which is the state the HDD industry has been in most of the time - why IBM sold off its storage division to Hitachi, who is now trying to sell it to Western Digital). The price fluctuations are the feedback mechanism which cause manufacturers to produce more or fewer drives in response to demand. Eliminate it and you break the economy.
The problem with your example is that it's well documented that there was a thriving black market in Britain during the second world war, and those willing to pay the butcher the price he wanted for the "extra" sausages he had acquired would eat better than those who couldn't.
It assumes the following logic: If it is more important to you than to someone else, you'd be willing to pay more for it.
The fairness of this then is inversely proportionate to the gap between the rich and the poor. In absence of any regulation or mitigation this results in effect that the rich people are more important than the poor people.
In democracies if this is too blatant it can be dangerous for the rich, since the poor people out-vote the rich people. But in many places the poorer people are ignorant and badly educated, and they and their children would likely be stuck in their "caste".
Extrapolation from this: there is a limit to the amount of resources the Earth has. So who decides how the wealth and resources should be distributed and what is fair?
No, that's just crazy!
We should give one unit to an artist, one unit to each of the five bakers, one unit to the crazy guy, one unit each to two farmers, and the remaining six units each go to a different storer.
the communist method.
everyone orders the car and the plumber and they'll arrive 10 years from today, for the price they are today.
sure, the market system isn't fair, but it's fair to the seller - and the normal people who got the disks from some random queue would be selling them on ebay or black markets anyhow if they had higher value than what they paid for.
world was created 5 seconds before this post as it is.
Not at all. There's nothing inevitable or deterministic in your suggestion. The secondary market isn't relevant to all the participants of the primary round-robin system. Most participants will use the hard drive they got for their own projects (that's why they joined the round-robin queue in the first place). A small fraction only will decide to defer their projects, and sell their drive on a secondary market.
Only very briefly. Then the bureaucrats responsible for running the system, or the guys driving the van that delivers them, will realise that they can make life much better for themselves by "losing" half the supply and selling it on the secondary market. Go look at the USSR for what happens when you try and run a society on something like round-robin.
The state ensures that all the population is able to obtain access to goods, and that is exactly as fair and legitimate as letting people die in the streets?
Yup. It ultimately depends on how you define fairness - whether the fair way to get more resources is to work for them, or to have more children and have the government confiscate them for you.
Finally, if *survival* is at issue, I'd say that rationing is a lot more rational than a free market alternative, irrespective of fairness, welfare or legitimacy.
You'd have to look at the results, and I'm not aware of any proper studies on this. Maybe a free-market system would have let more people starve initially, but also mean the people most vital to the war effort were better-fed and thus able to work harder, ending the war sooner and thus saving more lives overall.
I am trolling
OK, so everyone in the world should have their own personal Boeing 747. But they don't make themselves. So the only way for everyone to have one is to get lots of people to build them. Even if we put everybody in the world to work building them, I doubt they could produce enough for everyone to have one each.
And of course, if everyone is busy building jet planes nobody's growing food or sanitizing telephones and everybody dies, one way or another.
In short: resources are finite, therefore it's impossible for everyone to have everything.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Let's not be hasty. *You* aren't worthy to have one. Paris Hilton however, is.
No, in short: the opposite of "there are some experiences in life that [you] can never have because the number of zeros in your bank account is too small" is "there are some experiences in life that you can only have if your bank account is sufficiently large".
It's ok to believe that last sentence is fair, and that you aren't worthy like Paris. It's a free country and everyone's opinion counts, more or less.
A small fraction only will decide to defer their projects, and sell their drive on a secondary market.
You mean, everyone who values their drive more than the secondary market price will use it on their project. But what happens when people who don't want or need a hard drive join the queue because they know the secondary market price is higher than the round-robin price?
You're right that I started mixing up price and cost as terms there near the end. I meant "price" throughout.