Slashdot Mirror

← Back to Stories (view on slashdot.org)

Higher Hard Drive Prices Are the New Normal

Posted by Soulskill on from the sorry-about-your-luck dept.

An anonymous reader tips an article looking at the state of HDD pricing now that the market has had time to recover from the flooding in Thailand and a round of consolidation among manufacturers. Prices have certainly declined from the high they reached during the flooding, but they've stabilized a bit higher than they were beforehand. Quoting: "Are things going to change any time soon? We doubt it. WD and Seagate both reported record profits this past quarter. In Q1 2011, Western Digital reported net profit of $146M against sales of $2.3B while Seagate recorded $2.7B in revenue and $93 million in net income. That’s a net profit margin of 6% and 3%, respectively. For this past quarter, Western Digital reported sales of $3B (thanks in part to its acquisition of Hitachi) and a net income of $483 million, while Seagate hit $4.4B in revenue and $1.1B in profits. Net margin was 16% and 37% respectively. With profit margins like this, the hard drive manufacturers are going to be loath to cut prices. After years of barely making profits, the Thailand floods are the best excuse ever to drive record income for a few quarters. All of this means that while we expect prices to gradually decline, holding off on a necessary purchase doesn’t make much sense."

9 of 268 comments (clear)

  1. Really? by angryfirelord · · Score: 5, Insightful

    You mean, companies will collude together in order to raise the price of goods in that market? I'm shocked, shocked I tell ya!

    1. Re:Really? by ShanghaiBill · · Score: 5, Interesting

      You mean, companies will collude together in order to raise the price of goods in that market?

      When there are only two or three competitors in a market, actual collusion is no longer necessary. They simply have an unwritten and unspoken agreement to keep prices where they are. Neither WD nor Seagate has anything to gain by cutting prices that they know their (only) competitor will match.

      Regulators should have never allowed the Hitachi acquisition to happen. The HDD industry was already over consolidated.

    2. Re:Really? by ZeroSumHappiness · · Score: 5, Insightful

      Preferably by ending behavior that causes sarcastic shock.

    3. Re:Really? by CannonballHead · · Score: 5, Insightful

      How is it illegal for a company to take what customers are willing to pay?

      How is it illegal for companies to simply not lower prices... without colluding with each other?

      Since when are profit margins required to be low?

    4. Re:Really? by alexander_686 · · Score: 5, Insightful

      Just to extend the argument, Game Theory suggests that there are 2 stables states when you get down to 2 or 3 big players. Either cozy (Biggest firm is the price leader, everybody follows suit. Nobody wants a war) or fierce - no quarter is given by either side.

    5. Re:Really? by R3d+Jack · · Score: 5, Interesting

      The HDD industry was already over consolidated.

      Really, Really? The previous margins were tiny; the current margins are thin. I like low prices, too, but I also like companies that produce quality products to stay in business...

  2. New solid state storage by macemoneta · · Score: 5, Interesting

    Most articles I've seen indicate that rotational storage (and existing flash-based SSDs) will be replaced within 2 years by memristor-based storage or similar non-rotational, non-flash storage. It makes no sense for hard drive manufacturers to "race to the bottom" when they've already consolidated into 2 major manufacturers and sales have such a short term outlook.

    --

    Can You Say Linux? I Knew That You Could.

    1. Re:New solid state storage by SJHillman · · Score: 5, Insightful

      Haven't they been saying that for a few decades now? Rotational media will be around for a long time to come, barring any real shattering breakthroughs in solid state media. Some markets, such as laptops and workstations which value speed over capacity, will likely transition to SSDs being the norm within the next 5 years or so, but when you need a lot of storage you'll still turn to hard drives for at least another decade or two. Given that hard drive technology is still having breakthroughs, it will be some time before SSDs can catch up in overall capacity, nevermind price per GB/TB.

  3. Ya well there's some new evidence by Sycraft-fu · · Score: 5, Informative

    It's called the "SSD" section on Newegg. You are right that head-in-the-clouds type tech people have been saying that magnetic media will get replaced, but it has just been wishful thinking. However now it is. SSDs sell quite readily. They aren't going to displace HDDs tomorrow or anything, and I'd say that 2 year timeline is a bit optimistic, but they are already making big in roads.

    While they don't compete in terms of storage/$ they are getting to the point where they are cheap enough for enough storage that people find them worthwhile. That's all it really takes. Few people actually need 2TB of storage, the idea that SSDs have to be dead equal to HDDs is silly. Many people will decide they can get on just fine with 160GB and would rather have the speed.