
Just how bad are hard drive prices going to get? - mrsebastian
http://www.extremetech.com/computing/103711-hdd-pricewatch-you-know-where-its-going-we-tell-you-how-much-its-going-to-hurt
======
CWuestefeld
_No one has actually run out of drives yet. Most manufacturers have stated
they have drives enough to last them through the end of November_

Actually, the situation looks much worse than that, from where I sit. I work
for a major "large account reseller", and my code is what builds the customer
catalogs, so I've got an intimate view of this.

As the drives become unavailable, one would expect them to be marked as
backordered in the datafeeds we get from the suppliers. But the situation is
so dire that two of the three major suppliers (Ingram Micro, Tech Data, and
Synnex) have actually removed hard drive products altogether from their feeds.

(my code doesn't appreciate this: it knows the difference between backorders
and discontinued products!)

------
nakkiel
What most articles fail to address is that most of the big brands have
factories here and that Thailand accounts for a way too large share of the
production of hard drive parts, regardless of brands. In other words, Thailand
is the SPOF of the hard drive industry.

Also, FYI floodings are expected to last one more month (water just isn't
flowing that fast) and factories will need time to recover and reach 100%
operation (not to mention the overall infrastructure damage). The one month
thing is an optimistic estimation from the government. A practical example:
some Pakistanis flooded last year were finally getting back to normal when
they got hit by this year's floods. No one really know how long it's going to
last in Thailand.

WD, in a statement a few days old, said it expected to get back to full normal
in the summer.

Edit: for those who just had no idea:
[http://www.boston.com/bigpicture/2011/10/thailand_flood_reac...](http://www.boston.com/bigpicture/2011/10/thailand_flood_reaches_bangkok.html)
(I used to live a couple of blocks away from picture 7).

~~~
nakkiel
I felt a bit bad a about the lack of figures in my assertions.

Regarding supply:

"HDD shipments in the fourth quarter will decline to 125 million units, down
27.7 percent from 173 million in the third quarter [...] Thailand is the
world's second-largest producer of HDDs after China."

Regarding parts:

"component makers like Nidec [...] supplies more than 70 percent of all global
HDD motors"

In other words, production will likely continue to drop until production
resumes.

Source:

[http://www.macworld.com/article/163336/2011/11/thai_floods_h...](http://www.macworld.com/article/163336/2011/11/thai_floods_hit_q4_hard_drive_production.html)

------
jessriedel
>Here’s the really bad news. No one has actually run out of drives yet. Most
manufacturers have stated they have drives enough to last them through the end
of November, meaning that the current price hikes are the result of shipment
reductions, supply-side manipulation to reduce demand, and undoubtedly some
degree of speculation by the middle men. This last factor has an impact on the
total price, but it’s not what’s causing the problem.

>First off, the so-called “gray” market for hard drives is going to
explode....DigiTimes reports that gray market HDD sales are already booming as
panicked OEMs have tried to lay in additional inventory to see them through
the coming months.

The world must be a scary place when you don't understand basic economics,
with a boogeyman man behind every corner.

~~~
spacemanaki
Could you elaborate on your criticism?

I don't understand basic economics. It's something I regret and would like to
change.

~~~
jessriedel
To add to what mkeblx said: what's happening is not only what's to be
expected, it almost exactly what you want to happen ideally.

If suddenly the world supply of hard drives is cut to 10% of its normal values
by a chance event (and we concentrate on the time period before new
compensating production can be started) then those hard drives become more
valuable. The price goes up, so that the people who are willing to pay the
most for the drives get them. If Bob will only pay $100 for a drive because
he's just using it to store his 2TB of cat pictures, but Sam will pay $500
because he needs the drive to run his business, then Sam will get the drive
but Bob won't. If you try to hold down prices artificially with legislation
(price ceilings) then each is equally likely to get the drive, which most
agree is not good.

(Now, there are a million caveats to this naive Econ 101 treatment, especially
regarding basic necessities--water, food, shelter--and disaster situations.
And any normative "should" statement requires people to agree on a theory of
ethics/morality. But in this case, most will agree that the basics of supply
and demand lead to the appropriate outcome.)

\------------

Incidentally, I was surprised to find that the Khan Academy has a bunch of
macroeconomics and finance lectures, but little in the way of basic
microeconomics. (This is especially funny because microecon is better
understood.) Anyone know a better source for an introduction to supply and
demand?

~~~
anigbrowl
Yeah, I can't understand the widespread ignorance of/indifference to micro
either. It's like people either think it's less important (because of the
name) or that it only applies to people running manufacturing or retail
businesses. Macroeconomics is seriously incomplete, so when it fails to
predict the future well people dismiss economics as a whole, not realizing how
fantastically useful and illuminating micro is. Admittedly micro suffers from
not having a good theory of oligopoly, but I venture to suggest that that's a
bit like the 3-body problem.

For philosophical types, I recommend 'New Ideas from Dead Economists' by Todd
Buckholz. If you just want to get going with the math, I like the Barrons
Business Review book on Economics by Peter Eisen. You should be able to find
either of these used for a few bucks.

~~~
wanorris
I don't think it's an indifference to microeconomics in particular so much as
an indifference to anything that doesn't seem like it's especially relevant to
one's life at the moment. People are indifferent to structuralist anthropology
too, just to pick a random example. I agree that people are probably
misinformed as to how useful microeconomics might be to their life though.
It's a fantastically useful subject.

The reason macroeconomics is on the Khan Academy and has more general interest
these days comes from the fact that people feel like their lives are in
turmoil due to the economy, the real estate collapse, and Wall Street, and
they don't understand how any of it works. Macroeconomics may be incomplete
and perhaps even problematic, but it's the subject that can most shed a light
on complex interconnected problems as opposed to local specific ones.

~~~
anigbrowl
Agreed...I just have my doubts about how well one can really understand macro
without a firm grasp of micro. Some people reflexively dismiss economics in
general as just so much dogma, and it's hard to make the case for economics as
a discipline when micro is so poorly understood.

------
andrewcooke
why have they added 100% to all the percentage price increases? if something
cost $100 and now costs $150 then the price _increase_ was 50%, not 150%.
grumble grumble.

~~~
Lagged2Death
I don't know if they've updated their chart since your observation, but the
math looks right to me at this writing.

The WD10EARS drive (first row) was selling for $60, now sells for $140, and
that is indeed an increase of 133%. The MP4 drive (last row) has risen from
$50 to $100, and is noted as a 100% increase.

I think the chart would be improved by showing both the old price and the new
price, making it more obvious how they arrived (correctly or otherwise) at the
percentages. This way, checking the math requires visiting Camelegg oneself.

~~~
andrewcooke
huh. it looks like they fixed it. i didn't take a snapshot, but originally no
value was under 100% and several were over 200%. and i checked the disk that
was shown in the plot above.

oh, and they actually say so in the table caption: _This graph was updated
after publishing to fix the percentages._ (although it's the table that was
fixed, not the graph...!)

------
wuster
I think the best thing for everyone to do is to calm down and not go running
to Costco/Amazon/Newegg to hoard hard drives.

[http://www.npr.org/blogs/thesalt/2011/11/02/141771712/how-
fe...](http://www.npr.org/blogs/thesalt/2011/11/02/141771712/how-fear-drove-
world-rice-markets-insane)

The perception of scarcity, which leads to hoarding, only makes the scarcity
problem worse for everyone.

~~~
_delirium
It can be good business to hoard and then, after hoarding drives up scarcity,
re-sell at a higher price (the ticket-scalper business model).

~~~
billswift
I couldn't tell if you were being sarcastic since you didn't offer any
explanation, but it is true and wuster is wrong.

Hoarders/speculators help by smoothing the scarcity and resulting price
increases over time. By buying things up early, they increase the price and
scarcity early, which gets people motivated to switch to alternatives when
they can (and warns people who weren't paying attention to whatever caused the
shortage, the floods in this case, of the problem). When they resell later,
their stock keeps the shortage and price increases from being as extreme as
they would otherwise get without the hoarders.

~~~
timwiseman
That certainly can happen under some circumstances, but for it to work, a
number of factors have to be true.

For one, the shortage has to be a real one, and not directly caused by
hoarders, as happened with toilet paper during the 1973 oil crisis. In this
case, the hoarders pretty much hurt everyone (other than providing a very
clean and clear example of the Thomas Theorem).

For another, the hoarders actually have to sell around the height of the
shortage. If they sell after the shortage is resolved, then they took what
they were hoarding off the market only to resell again when it was no longer
needed and probably took a loss in the process.

So, hoarders can certainly help smooth out a shortage, especially an
unexpected one, but it will not always work out that way.

------
igrekel
I was going to purchase a new NAS yesterday but they now only allow each
customer to have a single hard drive with a purchase.

------
trafficlight
Take a look at <http://camelegg.com> (a Newegg price tracker). Search for a
hard drive, say 'Western Digital Caviar Black'.

Click on any of the drives and notice the more than 100% price increase on
every single drive.

------
FollowSteph3
Even though SSD's are still expensive (but well worth it in my opinion), we
could see the $$/gb come close enough for them to cross into mainstream much
much quicker. Most people honestly don't need 2-3 Tb's of space. It's nice to
have, but more often then not it's not used up. And if you need more, you can
always buy an external to store your media.

So if the price of a standard 2TB harddrive hits say $300-400, then it would
make more sense to throw in a 256Gb SSD drive. Or even a 128Gb drive. It's
small, but most people don't honestly use it. Plus it makes the computer feel
many many times faster...

~~~
Mordor
Isn't there going to be an increase in SSD's too?

~~~
tryke
I would expect an increase in SSDs, especially since they are a "substitute
good" for HDDs.

<http://en.wikipedia.org/wiki/Substitute_good>

------
jaequery
Just give it about two years, the hard drives will go the way of the
dinosaurs.

Hard drives? What's that? It'll all be solid state drives.

~~~
wmf
No, a roughly 10x price difference will not be eliminated in two years.

------
lawnchair_larry
I heard this is all because Goldman added hard drives to their commodities
index. ;)

------
shimsham
flash floods?

~~~
nakkiel
Monsoon floods. Way too much and monsoon rainfall combined with poor
governance. Officials got a warning last year but didn't listen. Over 500
death so far.

