Hard Drive Revenue About To Take a Double-Digit Dip

Lucas123 writes "Ultrathin notebooks, smart phones and SSDs are all putting pressure on the hard drive market, which is set to take an almost 12% revenue loss this year, according to a new report from IHS iSuppli. Hard drive market revenue is set to drop to about $32.7 billion this year, down 11.8% from $37.1 billion last year. At the same time, In what appears to be a grim scenario, the optical disk drive industry is expected to encounter continued challenges this year, and optical drives could eventually be abandoned by PC makers altogether."

Comments

Less demand

[fustakrakich]

That means prices will go down, right?

Re:Less demand

[8ball629]

That means prices will go down, right?

We can only hope. Recently HDD manufacturers seem to be coming up with any excuse possible to increase the price per unit and I could see them increasing the price just to lessen the blow of decreased sales.

Re:Less demand

[Dr. Spork]

Maybe. But there will also be much less investment in further density improvements. Every dying technology reaches a price minimum, after which point the price actually increases. Even though memory is cheap, a new stick of DDR costs more now than the same stick would have cost five years ago, even though the demand was much higher then. That's simply because manufacturers lost all incentive to produce DDR because of the low demand. The same thing could happen to hard drives. You'll know we're in trouble when factories start scaling back production, closing or retooling for the manufacture of something else. We're not there yet, but we soon might be.

Re:Less demand

[Khyber]

"or at least stop going down ignoring the effect of the Taiwanese floods."

You could at least get the country right. It's Thailand, not Taiwan.

Re:Less demand

[Githaron]

I am more worried about traditional computers following this trend as the average Joe finds all his non-productive computer usage can be done on a tablet and gaming console. Power users, productive users, and PC gamers would left spending even more money on equipment than they already do.

Re:Less demand

[Jah-Wren Ryel]

That means prices will go down, right?

That would probably be true in a competitive market.

But right now the market for hard disks is between two giants (Western Digital and Seagate) and one tiny little division of Toshiba that doesn't make much if any 3.5" models. I think we are much more likely to see oligopoly-style non-competition and thus price stability if not outright increases.

Re:Less demand

[whoever57]

But right now the market for hard disks is between two giants (Western Digital and Seagate) and one tiny little division of Toshiba that doesn't make much if any 3.5" models

And SSDs. The availability of drop-in replacements for spinning-disk hard drives alters the market dynamics. SSDs are a lot more expensive, but they also offer some big benefits: lower power, faster access. The availability of SSDs is likely to impact the price of spinning platters much more than the 2-supplier oligopoly.

Re:Less demand

[Miamicanes]

For a hint of where the market for spinning drives is going, look at DLP. DLP never totally went away... it just walked away from the low end, then milked the high end for years.

SSDs are getting cheaper, but for raw bulk digital tonnage and petabytes of ripped Blu-ray pr0n, it's still hard to beat spinning hard drives. Manufacturers will just quit making small drives as SSDs catch up, add platters until they can't fit anymore into a 3.5" enclosure, then revisit the past and reintroduce 5.25" hard drives, just like Quantum did ~15 years ago. At some point (probably 10-20 years from now) SSDs might eclipse spinning hard drives, but I wouldn't write them out of the picture TOO soon. We'll be buying them LONG after Joe Sixpack and his kids have forgotten what they are.

Optical media will probably be around longer, as long as Hollywood doesn't manage to kill it off, because it has one concrete advantage: longevity (as long as it's not based on organic dyes). BD-R media is likely to be around (in single, 2, 3, 4, or more) layer forms for a really, really long time.

Prices won't necessarily go up per se, but drives will probably get more expensive over time because the low end will just cease to exist, and manufacturers will try to make the drives bigger, faster, more redundant, (god forbid) repairable, or some permutation of the above, while maintaining the same price points and gradually just eliminating the lower ones until the only spinning drive you can buy is a 5.25" 500TB Western Digital Diplodicus Max with 256GB flashcache for $299.

Re:Less demand

[teh dave]

And won't be missed.

I will miss them. I still like optical discs, as they make an excellent WORM media (Write Once, Read Many). This makes them good for archival storage of files that aren't huge movies, like documents. A double layer BD disc holds 50GB, which is plenty for documents, config files, code, save games, even photos or moderate amounts of music. Just because you can't fit your entire torrented movie collection doesn't make them useless. You see, I can write a BD disc, and close it. I then know that nothing can write to it again (well, practically - how many people have BD burners, and mine won't anyway), which means it's safe to use in an untrusted (or potentially infected) system. Name a cheaper storage medium which has this capability.

I also find many people dismissing optical media for movie and game distribution, and claim that these days it should all be distributed online. It must be nice to have a fibre Internet connection to your house, but back in the real world where everyone else lives the average Internet connection speed is still a couple of megabits, and that isn't improving very quickly at all. People like myself are stuck with a measly three megabits... you expect me to download a 20GB video game or a 40GB movie on that? I'd be waiting a week!

Re:Less demand

[Jah-Wren Ryel]

That is just the price history of one model in one country. In the US, I scooped up eight 3TB external drives off the shelf of Target after the price-gouging started because Target was slow to catch up with the online gougers. They were $99 each. Yes, $99 for a 3TB external drive at a regular brick and mortar department store,, not on sale. The 2TB drives were $79.

Re:Less demand

[Jah-Wren Ryel]

For a hint of where the market for spinning drives is going, look at DLP.

For anyone else going WTF do projectors and televisions have to do with storage, he's actually talking about DLT - Digital Linear Tape which is the marketing name of the Quantum tape product originally developed by DEC. The competing format is LTO (Linear Tape-Open) which basically killed DLT circa 2005. HP, IBM and eventually even Quantum (after acquiring Seagate's tape division) make LTO products.

Re:Less demand

[hairyfeet]

And THIS, this right here, is why their sales are falling. Before the flood I was getting 1TB drives at around $40 and 2TB drives for around $65 but since the flood prices have been close to double that so I simply haven't been buying. If the prices come down? Sure I'd be happy to add another couple of TB of storage, but I'm not gonna pay premium price just to add more space.

Re:Less demand

[hairyfeet]

Actually if anything I have a feeling HDDs are gonna have a "bounce" in a year or two as all those that got cheap SSDs get burnt when they flip the switch and find all their data gone.

The problem with SSDs is frankly they have never really licked the controller issues and as they add more space the problem just seems to be getting worse. I have honestly never seen an SSD die from the cells being used up but I have seen a LOT of SSDs that had the controller fail and take the drive out. Over at coding horror they labeled this the hot/crazy scale in that to get the hot performance of SSDs you had to put up with the crazy failure rates. While those of us who are religious about backups won't have a problem with this most folks are NOT religious about backups and WILL get bit in the ass when they flip the switch one day and just find their data gone forever.

So I have a feeling when all those cheapo SSDs start going tits up there is gonna be a lot of folks that write off the tech and go back to HDDs, say what you will about HDDs they usually give you plenty of warning before going tits up.

Re:Less demand

[greg1104]

The anecdotes from places like Coding Horror are just that: anecdotes. Were early SSD failure rates higher up to 2011 than regular drives? I think they've gotten better as years pass. What about now though? Even the 2011 survey from Tom's Hardware already put SSD reliability as already higher than regular drives.

I've had plenty of spinning drives that didn't last more than a hundred days too. Hard drive controllers fail with no warning, just like SSD ones do. I think this is emphasized as more associated with SSD failures because it's the only way SSDs die.

In the middle of 2011 Intel raised warranties to 5 years on the main SSD I use in my systems. In late 2011 Seagate dropped warranties to a year. If you don't care about high capacity, it's possible for a SSD to cost less per year than a mechanical drive now. That's not a glowing statement about the manufacturers thinking SSD is more likely to fail either.

Re:optical disks still cost less then usb keys in

[fatalexe]

I switched to using USB drives to install the OS of a computer a long time ago. You can even keep them up to date with OS patches unlike burnt disks. Usually installs faster too.

Re:ok then

[cheater512]

Yes the burners are just starting to get affordable, but is it actually too late?

Back in the days of 20gig hard drives and 128mb flash sticks, DVD burners were a god send.
But now we are at 3TB hard drives and 64-128gig flash sticks plus 'cloud' storage which is better for long term archives.

Is a measly 25gig single sided going to cut it when they are just starting to get affordable?
Some people will buy them but I suspect every single computer will not have one like they used to with DVD burners.

Low end drives are too expensive

[MarioMax]

It just drives me absolutely crazy that low end hard drives are as expensive as they are, and stubbornly not dropping. Take for example these prices on Newegg for a new internal desktop hard drive:

250GB - $49.99 ($2.00 per 10 gigabytes)
320GB - $59.99 ($1.87 per 10 gigabytes)
500GB - $58.99 ($1.18 per 10 gigabytes)
1TB - $79.99 ($0.80 per 10 gigabytes)

I mean, don't get me wrong, the 1 terabytes are an attractive price on a price-per-gigabyte point of view. But there are times where you simply don't need (or want) a large drive, and a small one would do, or your budget for a larger one doesn't exist and you need a smaller drive. But the price per gigabyte is so out of whack on the low end models, it doesn't make sense to waste your money. You'd think stores and suppliers would want to dump their low end inventory for the larger capacities, but apparently they aren't in any hurry.

Re:Low end drives are too expensive

[Tackhead]

250GB - $49.99 ($2.00 per 10 gigabytes)
320GB - $59.99 ($1.87 per 10 gigabytes)
500GB - $58.99 ($1.18 per 10 gigabytes)
1TB - $79.99 ($0.80 per 10 gigabytes)

I mean, don't get me wrong, the 1 terabytes are an attractive price on a price-per-gigabyte point of view. But there are times where you simply don't need (or want) a large drive, and a small one would do, or your budget for a larger one doesn't exist and you need a smaller drive. But the price per gigabyte is so out of whack on the low end models, it doesn't make sense to waste your money. You'd think stores and suppliers would want to dump their low end inventory for the larger capacities, but apparently they aren't in any hurry.

There's more to a hard drive than the platters.

What this pricing is telling you is that it costs about $30-40 to produce a hunk of machined aluminum, a controller board, a few connectors, some cache memory, a voice coil, a fancy motor, and a read-write head. And it costs about $5 to produce a platter, regardless of whether it was a 500GB/1TB platter that's only good enough to be used on one side, both sides of a 320MB platter, etc.

The pricing curve for SSDs will have a very long-term advantage over spinning metal in that the costs of the "mechanical" parts of an SSD are negligible in comparison to the costs of a spinning disk. There'a a very real floor in HDD pricing, because there's a lot of things inside an HDD that don't store bits.

Re:Low end drives are too expensive

[Hadlock]

The case alone costs about $12 to buy the raw materials, cast, and precision machine. The only difference between the 250GB and 1TB version is the number of platters, quality of platters and model of read/write heads. The profit margin on the 250GB is probably about 15%, just the same as the model with the high end 1TB platters & read/write heads. Eventually you run in to a price floor, which is based on the physical reality that the drive is made from high grade machined aluminum.

Re:Low end drives are too expensive

[Kjella]

There's more to a hard drive than the platters. What this pricing is telling you is that it costs about $30-40 to produce a hunk of machined aluminum, a controller board, a few connectors, some cache memory, a voice coil, a fancy motor, and a read-write head. And it costs about $5 to produce a platter, regardless of whether it was a 500GB/1TB platter that's only good enough to be used on one side, both sides of a 320MB platter, etc.

And that's just the production, you still have the same costs on packaging, distribution, support, warranty returns etc. no matter if it's a 250GB or 1TB drive you're selling. I see the same thing here with for example broadband, there's a price floor just to operate a service to you no matter if the flow is a trickle or a torrent.

It's deserved

[Anonymous Coward]

The market is punishing the Hard Drive creators for the fact they engaged in price gouging. The popularity of SSDs skyrocketed after hard drive manufacturers took advantage of several factories being disabled. Now that people like SSDs, the popularity of hard drives is permanently diminshed.

Did you enjoy your short term gains without and long term goals? Hope you did. Bye bye in a few years, then!

Re:It's deserved

[Rich0]

Did you enjoy your short term gains without and long term goals? Hope you did. Bye bye in a few years, then!

You say that as if the company has feelings. The company didn't enjoy anything, and will feel no pain when they collapse.

The executives running the company, however, certainly enjoyed their hefty bonuses during the years they gouged the industry. They can just coast now until they get fired, and then retire to their private islands. I'm sure they've all learned their lessons.

Re:ok then

[Miamicanes]

non-LTH BD-R has a HUGE advantage over any hard drive: you can throw it in a drawer, forget about it for the next 25 years, maybe even let it bake in a hot, humid Florida garage for 5-10 years, and end up with something that's likely to still be readable. There are so many things that can go wrong and break with a normal hard drive over the span of 25 years, the likelihood of ANY hard drive actually working even 10-15 years down the road after years of disuse and questionable storage is basically "nonexistent", and depressingly low even if you've kept it in a 70 degree room with low humidity the whole time.

DVD-R used organic dyes and isn't likely to be a reliable long-term storage medium, but the ORIGINAL (non-LTH) BD-R discs are about as close as you can get with modern media to "carving it in stone". There's even a company (Milleniata?) who makes discs that are basically BD-R media burned to DVD geometry (you need a supported BD-R drive to burn them), and a likely shelf life of a hundred years or more (especially if you burn 2 or 3 copies, and store them in different locations, so you can scrape the bits from all 3 and take advantage of error correction to reconstruct an intact copy decades from now).

VHS has been dead as a consumer format for more than a decade, but there are STILL companies selling new VCRs. What vanished were the cheap consumer models. What remains are heavy-duty pro models designed mainly for recovery and restoration work... and it's a market that's slowly growing as desperate consumers realize they no longer have the players for their old high school band/cheerleading/football tapes their parents made years ago, and they go looking for solutions (or people who can do it for them). Best of all, the patents have all basically expired, so now a smaller company with the ability to machine metal & plastic parts actually CAN step in to take over a market that companies like Sony & Matsushita lost interest in years ago.

Re:ok then

[Kjella]

Not necessarily. R/W storage has always the risk that somebody accidentally deletes the archived files. HDDs can get damaged from mechanical shocks, flash products can die from ESD zaps. I still feel that the optical disc is the king of proper long-term storage.

There's not much chance of accidentally overwriting a disconnected external HDD clearly labeled BACKUP either. I take it you've never tried to restore a large amount of data from optical media? I have and they do get unrecoverable CRC errors, but what's almost as bad is the read speed of old discs. My drive would spin up, down, read and re-read so a single disc could take an hour to read. Even on good discs I say you'd be lucky to restore 4 DVDs/hour, and it takes 200+ to restore a single 1TB HDD. And unless you have a disc robot that means you'll be glued to your computer for days changing discs every 15 minutes.

If you want more security, the best way is more copies. With HDDs you could have triple backups with far less effort than making one DVD backup set. If you have the bandwidth make multiple online backups, don't trust one backup service. Of course in theory you could have supervirus wiping all your disks and logging into all your backup services and deleting all your files, but that's why you have a disconnected HDD. And if you're robbed blind or the house burns to the ground they'll all go unless you've taken one offsite, but your online backups will still be there. The chance of both on- and offline backups disappearing at the same time is practically none.

Hard Drive business is an oligopoly business

[Taco Cowboy]

Not if you cut supply.

In an open marketplace, where there are a lot of competitors, cutting supply would be a commercial suicide.
 
But the hard drive business we have today is an oligopoly business. After the rounds of M&A there are less than 5 serious contenders in the HD manufacturing business.
 
Cutting supply in such scenario has become a very possible option for the oligarchs.

Re:Where are the hybrids???

[k3vlar]

Apple doesn't have 3tb hybrid drives... theirs is a software solution. They include a 128gb off-the-shelf(-ish) SSD, and a 3TB platter-based hard drive. Their volume manager software "intelligently" shuffles data around, to optimize access speeds. Not sure how effective it is, but it sure sounds appealing in their advertising material.

This is sadly bullshit.

[citizenr]

We are living in an Information Age. Do you honestly expect all of the Clouds to store Petabytes of data on SSD drives?