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Retailers Respond To HDD Squeeze By Limiting Purchases, Raising Prices

timothy posted more than 2 years ago | from the now-you're-ready-for-econ-102 dept.

Data Storage 282

SKYMTL writes "With Thailand experiencing its worst flooding in generations, component manufacturers have been especially hard hit. The trickle down effect is having a huge impact upon hard drive manufacturers in particular. Retailers have responded by drastic price increases and even limiting hard drive purchases to 1-2 drives per person."

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282 comments

Opportunity (0, Redundant)

Anonymous Coward | more than 2 years ago | (#37799806)

I'm going to pull a few out of some machines I don't need and throw them on E-bay at some inflated prices. Profit!

Re:Opportunity (2)

ackthpt (218170) | more than 2 years ago | (#37799982)

What am I bid for this classic 5 MB 5 1/4 Full Height drive?!? Muah ha ha ha haaaa!

Of course I'm kidding - it's a collectors item!!

Price Spikes (2, Interesting)

Anonymous Coward | more than 2 years ago | (#37799822)

15%-30% price spikes? The 2TB drives I bought on Tuesday increased 46% in price (from $80 to $117) and not too long before them the had them on sale for $69.99.

Re:Price Spikes (1)

Anonymous Coward | more than 2 years ago | (#37799862)

The bottom of the barrel Hitachi 3Tb drives on Newegg went up from $119 yesterday to $209 today.

Re:Price Spikes (0)

Anonymous Coward | more than 2 years ago | (#37799882)

Also, limit 1 per customer...

Re:Price Spikes (5, Insightful)

Xemu (50595) | more than 2 years ago | (#37799980)

Classic PR tick to fake scarcity to make a bad deal appear better than it is. 99% of customers would only buy 1 anyway.
It means that they've changed from hi-tech marketing to commodity marketing like your grocery store always uses.

Re:Price Spikes (1)

sjames (1099) | more than 2 years ago | (#37800220)

Not to mention that since they already bought the drives they are selling now, the price hikes are gouging.

Re:Price Spikes (2)

maeka (518272) | more than 2 years ago | (#37800590)

Not to mention that since they already bought the drives they are selling now, the price hikes are gouging.

That's not how pricing works.

Re:Price Spikes (1)

sjames (1099) | more than 2 years ago | (#37800720)

You must not understand what gouging is.

Sadly, that IS how pricing works, even if it's not a terribly ethical practice.

Re:Price Spikes (5, Informative)

optimism (2183618) | more than 2 years ago | (#37800738)

...since they already bought the drives they are selling now, the price hikes are gouging...

No, they're simply anticipating and spreading out the damage. This is microeconomics 101, supply & demand.

Let's say you're a big retailer who sells 10,000 drives per month, buying them for $70 each and selling for $100 each. You make $300,000 a month selling those drives. That revenue pays the salary and benefits for a couple of dozen employees.

Then the manufacturer tells you that, due to factory damage, they can only supply you with 2000 drives per month for the next few months. If all prices remained the same (which they probably won't; the manufacturer will raise your wholesale price if they can), you would lose $240,000 of your monthly revenue.

Now, your market research tells you that there is sufficient demand to sell 2000 drives/month at $200 each. You will still lose $180,000 of your revenue every month, due to lower volume, but the volume is now constrained by your supplier, not the market. Bumping the price saves you $240,000.

So you mark up the price on all of your existing stock now. And you still lose heaps of revenue until the manufacturer gets back up to speed. Might even have to fire a few employees to cut costs.

Re:Price Spikes (1)

optimism (2183618) | more than 2 years ago | (#37800772)

Typo.

Bumping the prices saves you $60,000 per month. $180,000 per quarter, which may be how long it takes these factories to ramp up again.

Re:Price Spikes (1)

optimism (2183618) | more than 2 years ago | (#37800526)

Classic PR tick to fake scarcity to make a bad deal appear better than it is. 99% of customers would only buy 1 anyway.

Agree on the marketing trick, but disagree on the 99%. Many customers buy hard drives only in pairs. Mirroring is the easiest form of backup.

Re:Price Spikes (2)

ackthpt (218170) | more than 2 years ago | (#37799914)

15%-30% price spikes? The 2TB drives I bought on Tuesday increased 46% in price (from $80 to $117) and not too long before them the had them on sale for $69.99.

So much for my plans of system upgrade any time soon.

I can wait.

Re:Price Spikes (1)

billcopc (196330) | more than 2 years ago | (#37799998)

That's fine, they will sell exactly ZERO of them until the price goes back to normal.

So the manufacturers got flooded, tough tits. If the industry is managed in such a way that they can't buffer a few weeks of supply lag, then these people deserve to lose money. It should not be the consumer's burden. Globalization is a double edged sword and the manufacturers need to be held responsible for their record profits.

Re:Price Spikes (2)

fuzzyfuzzyfungus (1223518) | more than 2 years ago | (#37800048)

Given how quickly online retailers can adjust prices(essentially limited only by the speed at which the factors that control pricing decisions change), I'm guessing that they are either selling enough drives to be satisfied with the situation, or simply cannot afford to sell them any more cheaply, because of upstream price increases.

Unless you have absolutely no overhead, and everybody has some, moving zero product isn't a situation you shoot for. Moving less product at higher margins is certainly a possibility, so that can't be ruled out on theoretical grounds; but it seems incredibly unlikely that the retailers have stopped moving stock entirely.

Re:Price Spikes (1)

PopeRatzo (965947) | more than 2 years ago | (#37800346)

Given how quickly online retailers can adjust prices(essentially limited only by the speed at which the factors that control pricing decisions change)

That only applies to raising prices with some products. Watch how quickly the price of gasoline goes up when the oil price per barrel climbs and how slowly it goes down when the price falls.

We've seen nearly a 50% drop in the price of a barrel of oil, and only about a 2% drop in the price of gasoline. During that same period, the cost of refining fell too. If the price of oil were to double tomorrow, the price on the pumps would jump $2/gal by Sunday morning.

Re:Price Spikes (1)

Anonymous Coward | more than 2 years ago | (#37800344)

That's fine, they will sell exactly ZERO of them until the price goes back to normal.

No, they won't. Most people don't follow the HHD market closely enough to notice those price fluctuations, and while the percentage is high, HDD prices have dropped so much in the past few years, that the increase doesn't rely make a huge difference.

Then of course there's business customers, who'll probably pay regardless - missing a desktop for an employee, or holding off on increasing capacity on a production system when it needs it is likely to be more expensive than a minor bump in the cost.

Re:Price Spikes (4, Interesting)

demonlapin (527802) | more than 2 years ago | (#37800744)

If the industry is managed in such a way that they can't buffer a few weeks of supply lag

Pretty much the entire world works this way now. It's called just in time manufacturing, and it is one of the many efficiencies that enabled Toyota and Honda to ride roughshod over Detroit in the 70s and 80s. It's central to Wal-Mart's profitability. You save money by not having large stocks on hand - you don't have to pay to warehouse them, and you're not stuck with a large stock of unsellable items when you change the underlying product.

Awesome! (2)

Capt.DrumkenBum (1173011) | more than 2 years ago | (#37799852)

For once in my life I bought before the prices went up. :)
I just bought a pair of 2TB drives for storing all my "Legally acquired media files." ;)

Re:Awesome! (5, Funny)

Anonymous Coward | more than 2 years ago | (#37799904)

Well, I just "bought" a pair of 2TB drives for storing all my legally acquired media files.

Re:Awesome! (5, Funny)

Anonymous Coward | more than 2 years ago | (#37800228)

And "I" just bought a pair of 2TB drives for storing all my legally acquired media files.

Re:Awesome! (3, Funny)

Anonymous Coward | more than 2 years ago | (#37800416)

And I just bought a "pair"* of 2TB drives for storing all my legally acquired media files.

* For values of "pair" sufficiently close to 1.

Re:Awesome! (5, Funny)

Anonymous Coward | more than 2 years ago | (#37800660)

Well I just bought a pair of "2TB drives" for storing all my "legally" acquired "media files".

~ Papa Lazarou.

Re:Awesome! (1)

Dunbal (464142) | more than 2 years ago | (#37799996)

Same here - got a 3TB WD drive and installed it last week. Same drive has gone up 40%.

Re:Awesome! (1)

GameboyRMH (1153867) | more than 2 years ago | (#37800382)

I've done all my drive shopping over the last two years, I won't need to upgrade anything until the file server fills up and there's still plenty of space.

Just got mine (1)

RCC42 (1457439) | more than 2 years ago | (#37799854)

Just picked up my latest hard drive a week ago. So I guess I should resell it now? How exactly is it that commodity speculators think again?

Not quite how commodity speculators work (2)

sirwired (27582) | more than 2 years ago | (#37800030)

If you were a commodity speculator, you'd have placed an order for way more than one hard drive a month ago for later delivery, and you'd be selling the right to have the billing and shipping information changed. You would never, yourself, actually have the ability to pay for, accept delivery of, or use, those drives.

Prices for 2TB up 50% (0)

Anonymous Coward | more than 2 years ago | (#37799868)

Went to buy a 2TB hard disk today. The price was 50% higher than yesterday. Got a 750GB 2.5" external hard disk instead, which cost the same as before the flood. Damn disaster profiteers.

Re:Prices for 2TB up 50% (1)

ackthpt (218170) | more than 2 years ago | (#37799938)

Went to buy a 2TB hard disk today. The price was 50% higher than yesterday. Got a 750GB 2.5" external hard disk instead, which cost the same as before the flood. Damn disaster profiteers.

Yep. But did you really have to buy now?

I'm putting my purchase off for a bit. The flood didn't damage the HDD plant, once they have power back it'll be business as usual.

Re:Prices for 2TB up 50% (0)

Anonymous Coward | more than 2 years ago | (#37800078)

I didn't have to buy the 2TB. I did need a new backup disk for an expansion I bought last week, but 750GB was big enough, so I got that. Not from the same retailer, of course. I should be good for at least half a year, unless something breaks.

Damn (1)

Anonymous Coward | more than 2 years ago | (#37799886)

I had a 2 gig that was on sale in my hand a couple weeks ago, and thought "nah, dont really need it now".

you know, it's not like it's a real shortage of hard drives or its end times for magnetic media. We're only talking about a period of a few months offline, surely theres enough stock to last.

This is opportunistic price gouging, and you should boycott everyone doing it, and identify the most eggregious offenders.

Re:Damn (0)

Anonymous Coward | more than 2 years ago | (#37800380)

You should have bought that massive *2 gig* hard drive!

Re:Damn (1)

sinan (10073) | more than 2 years ago | (#37800732)

Well, in 1991 I bought a 1GB drive from Andataco for $2700, a year later bought a 2GB drive for $2700. I remember oe of my EE friends telling me that we were at the "Physics limit" and could not go any higher in capacity.

Price discovery make distribution efficient (4, Insightful)

roman_mir (125474) | more than 2 years ago | (#37799896)

This is a good example of how raising prices works to distribute whatever resources in efficient manner, allowing those, who truly need whatever the resource (HDDs in this case) to come up with the largest bid on it, which means that the resource was most needed for that situation. It definitely beats artificial rationing.

Re:Price discovery make distribution efficient (0)

Anonymous Coward | more than 2 years ago | (#37799912)

This is a good example of how raising prices works to distribute whatever resources in efficient manner, allowing those, who truly need whatever the resource (HDDs in this case) to come up with the largest bid on it, which means that the resource was most needed for that situation. It definitely beats artificial rationing.

Um... correct me if I'm wrong... but they ARE doing artificial rationing as well, by limiting purchases...

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800010)

Yes, I read that, this simply means they are not raising the prices high enough, but this artificial rationing is stupid, it doesn't work, as you can make more purchases by buying once, buying another time, another time, etc.

This makes a good opportunity for somebody to buy all of those drives and make a profit by selling them at a much higher price if the stores are forced into these worthless tricks with rationing.

Re:Price discovery make distribution efficient (1)

xstonedogx (814876) | more than 2 years ago | (#37800098)

I don't agree that it is stupid. They sell more than HDDs. If I am building a system and can't get my hands on an HDD I'm not buying the other components either.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800200)

What did I say was stupid? The artificial attempt at rationing was stupid. The correct thing to do is to raise the prices enough, so that there is no secondary market formed (where somebody else buys the drives and still can sell them for a profit.)

If you need to build a computer right now and you can't wait, because the market is such that your project must be done now, you will pay a premium for this now more scarce resource, but at least you'd be able to BUY the freaking drives.

Here is a comment that was just left here as a reply to mine, complaining that this is price gouging, while simultaneously saying that he won't be buying his drives right now BECAUSE the price went up! [slashdot.org]

Well GOOD! This means the market IS doing its job, cutting off those, who do not actually NEED the drives at this time by increasing the prices enough, but at least those who actually do need to continue with their projects can get the drives and that guy CAN WAIT until they restart more production and prices go down again.

This is what markets do, this is what efficiencies are all about - finding the right availability/price ratios to satisfy the market demand in the most efficient manner to create a queue basically, to provide the resources to those who need them most first, etc.etc.

Re:Price discovery make distribution efficient (1)

sjames (1099) | more than 2 years ago | (#37800254)

Raising the prices would actually reduce profitability. Someone who just wants 1 drive now to build a system may be willing to pay a 40% premium, but not 100%. They wouldn't have bought 2 anyway.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800296)

This is what price discovery is about. If the prices are too high and there are no takers, then the prices will go down. What do you think stores do all the time with prices? They are moving them up and down all the time. I build and sell software that helps the store chains and suppliers to do this - search for most efficiency via price discovery and by comparing product categories/brands/subbrands/suppliers/manufacturers/seasons/colors, etc. The prices always move as stores are searching for more efficiency and profit.

If the prices are too high, then there is something wrong as well, but if the prices are too low, then it's also a problem - the stores are then not doing their job.

Re:Price discovery make distribution efficient (1)

sjames (1099) | more than 2 years ago | (#37800460)

And what they discovered is that an artificial limit is more profitable than gouging harder.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800514)

that's not in the story and obviously it's not true. What is more likely to be true is that they discover that their stock is emptied quickly, but that's just because somebody is buying all of it to resell at a more efficient (read higher) price at the corner, the way ticket scouts do.

Re:Price discovery make distribution efficient (1, Informative)

Anonymous Coward | more than 2 years ago | (#37799950)

Exactly! This is just the same as how, in impoverished, underdeveloped, famine-stricken countries, the people who most need food and water simply pay a higher price for it. Those who choose not to bid a higher price obviously did not have a great need for those commodities.

Re:Price discovery make distribution efficient (3, Informative)

roman_mir (125474) | more than 2 years ago | (#37800024)

this is artificial scarcity that you are talking about, because most of the problems in places like that are government (or whatever passes for a government) created. There are no free markets there, so there is no real price discovery, the places are used for their valuable mining resources most likely and the economies are not allowed to grow and improve because certain power brokers get their hands upon those economies by proxy and endorse various dictators and sell them cheap weapons to hold the people there hostages.

What you have here in your comment, is basic misunderstanding of economics and politics.

Re:Price discovery make distribution efficient (0)

Anonymous Coward | more than 2 years ago | (#37800066)

>What you have here in your comment, is basic
>misunderstanding of economics and politics.

What you have is a basic misunderstanding of human history and society. You appear to portray "artificial scarcity," and problem governments as anomalies, and present "free markets" as the norm. In the real world, however, "artificial scarcity" is endemic to human society, and I've never seen anyone cite a remotely credible example of a "free market." Markets are not, likely never have been, and possibly can't ever be "free." If there's a market then someone will successfully manipulate it.

If you want to disagree further, show me some legitimate examples of "free markets." No, I mean real examples, not fantasies quoted from airhead "philosophers."

Re:Price discovery make distribution efficient (1, Insightful)

roman_mir (125474) | more than 2 years ago | (#37800432)

you are observing free market in action with the HDDs here being priced higher than previously. If no gov't steps in and starts distorting the market with regulations on who may sell HDDs to whom and at what price and what the rules are, etc., then you are observing the market as it is supposed to function.

As to entire nations running free market economies - USA 19 century basically, and China today basically. They are as free market economies as we have observed in the last 200 years.

We also have pretty good references to very non-free market economies, command economies and how 'well' they do, also in the same time frame.

Re:Price discovery make distribution efficient (0)

Anonymous Coward | more than 2 years ago | (#37800638)

>As to entire nations running free market economies - USA 19 century basically, and China today basically. They
>are as free market economies as we have observed in the last 200 years.

(facepalm) You...must...be...fucking...joking!! There was nothing remotely free about the crony capitalism and skewed legal decisions of the 19th century (let alone the "free market" implications of slavery). And China today? Yes, there is some "market" action there, but it's hardly free: the government steps in and clears barriers for projects it deems important (e.g. rail transport upgrades, factory and housing construction, etc), manipulates its currency to increase exports and suppress imports; and, to top it off, it has population management policies that keep workers from moving to seek higher compensation.

One not be a support of command economies to see the flaws of the so-called "free market." There are intermediate options for market-based economies

Re:Price discovery make distribution efficient (0)

Anonymous Coward | more than 2 years ago | (#37800686)

>you are observing free market in action with the HDDs here being priced higher than previously.

No, it's "market" in action, but not "free market" in action: they are *absolutely* not the same.

> If no gov't steps in and starts distorting the market

Um, sorry: that's already happening. Most of the high-tech industry in SE Asia is supported by the government: it's given preferential treatment for land acquisition, support for utilities in preference to other civic needs, and often tax exemption. That's not a "free" market. Government "regulation" cuts both ways: supporting a particular enterprise must be considered equally regulatory as would government barriers. If that's not obvious to you, consider that all business is competitive: if the government helps your competitor, it hurts you.

Re:Price discovery make distribution efficient (4, Funny)

Bacon Bits (926911) | more than 2 years ago | (#37800282)

What you have here in your comment, is basic misunderstanding of economics and politics.

Welcome to Slashdot!

Re:Price discovery make distribution efficient (2)

billcopc (196330) | more than 2 years ago | (#37800032)

This isn't efficient distribution, this is gouging. There are other factories in the world, the dealers are simply taking advantage of a natural disaster to arbitrarily hike prices.

I was going to buy a stack of hard drives for a new server build, but now I'm going to wait it out. My supplier is not going to see a single penny from me for hard drives until this bullshit goes back down to normal. Since the majority of my sales consist of white-box file servers, that means they're losing out on about $20k a month. Maybe not a huge amount, but I'm just one guy. The Dells and HPs of the world will also apply pressure a thousand times harder than little ol' me, which means this gouge will not last very long. I give it a month.

Re:Price discovery make distribution efficient (1, Offtopic)

roman_mir (125474) | more than 2 years ago | (#37800096)

This isn't efficient distribution, this is gouging. There are other factories in the world, the dealers are simply taking advantage of a natural disaster to arbitrarily hike prices.

- is that what they taught you in your classes?

In this story the stores also decided to try and limit purchases by creating artificial rationing (which never works, by the way, just walk out and walk in again, or ask somebody to get another portion for you). So the stores truly were trying to solve a problem (as any price hikes based on more scarcity of resources are) - how do you sell at the optimal price? And this is the only real way to find the best efficiency in the market. There is always a price at which somebody is still willing to buy and then there is a price at which most are not willing to buy, so you have to find the price, that is the most efficient, which means people are still paying for it, but only those who REALLY need it.

Otherwise, if you sell UNDER priced, all you do is create another MARKET, where somebody buys from you and then resells on the corner at a higher price.

Do you ever think beyond your brainwashed state of absurd economic ignorance? You are exactly the person who DOES NOT NEED the hard drives bad enough to pay a higher price, and this is GOOD, because SOMEBODY NEEDS THOSE DRIVES MORE THAN YOU DO.

Somebody truly needs the drives much more than you do, and the raising of the prices allowed to cut you off and make sure that somebody who really needs the drives to get them before you do, because clearly - YOU CAN WAIT.

Somebody can't wait, and they will pay the premium. But if the prices didn't go up, then you would have bought your drives and there wouldn't be enough drives for somebody who REALLY NEEDS THEM, because you'd get your drives for your little project, but there is real actual SCARCITY here, because the plants are not producing enough supply to satisfy the demand at the previous low prices.

So you are giving an example in your very comment why the market works and you are calling it 'gouging', while you are 'gouged' alright. You are blind to the fact that the market did its job and the efficiency was achieved.

Re:Price discovery make distribution efficient (2)

sjames (1099) | more than 2 years ago | (#37800314)

Efficiency and progress is ours once more
Now that we have the Neutron bomb
It's nice and quick and clean and gets things done
Away with excess enemy
But no less value to property
No sense in war but perfect sense at home:

The sun beams down on a brand new day
No more welfare tax to pay
Unsightly slums gone up in flashing light
Jobless millions whisked away
At last we have more room to play
All systems go to kill the poor tonight

Gonna Kill kill kill kill Kill the poor:Tonight

Behold the sparkle of champagne
The crime rate's gone
Feel free again
O' life's a dream with you, Miss Lily White
Jane Fonda on the screen today
Convinced the liberals it's okay
So let's get dressed and dance away the night

While they: Kill kill kill kill Kill the poor:Tonight

With thanks to the Dead Kennedys.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800386)

A funny song, but unless you are part of the government, I don't see why you'd want to run wars as your business. If you are not a gov't (or a gov't promoted weapons monopoly) wars are not really profitable.

Killing valuable resources is stupid (and people are also resources, they make stuff that others want.) The point is that you completely misunderstand what economy is. Economy is production and we want as many people producing as possible, so killing potential producers is really dumb. You have been trained to believe that economy is about consumption. Well, why don't the Fed just print a trillion trillion trillion dollars then and let you consume everything, see how that works out for you.

Re:Price discovery make distribution efficient (1)

sjames (1099) | more than 2 years ago | (#37800444)

An unregulated economy produces a bell curve. The low end of ity starves to death unless it resorts to crime.

Re:Price discovery make distribution efficient (0, Offtopic)

roman_mir (125474) | more than 2 years ago | (#37800564)

No, unregulated economy produces an actual economic boom, the way USA saw in 19 century. Then gov't becomes big enough to take over the nation because the private businesses created so much wealth, that gov't taxes were enough to buy too many favors, then the system is corrupted by politicians gaining power over markets and businesses, giving themselves power to regulate and tax income and counterfeit currency.

That's the beginning of the end of the economy and the end is not pretty, the end is where the poor truly starve as opposed to being gainfully employed, as most of the people are in growing economies that are free of gov't regulations and where prices actually go down and money gets more and more purchasing power. Of-course somewhere in between there the gov't gets so much power, that it regulates everything into oblivion, including any real economic activity and it also changes the education system eventually to make sure that the people lose any understanding of what real economies are about. Gov't makes sure that people cheer for more gov't, even though it's gov't that destroys the economy.

Re:Price discovery make distribution efficient (1)

sjames (1099) | more than 2 years ago | (#37800708)

You left out the other quaint aspects of the 19th century like child labor, families rendered destitute when the breadwinner was hurt or killed in an unsafe workplace, 18/7 work just to make ends meet, etc followed by a crash that forced the new deal to get things moving again.

Great deals of deregulation do typically lead to a boom, followed shortly by a crash.

The intrinsic problem with a completely free economy is that wealth attracts wealth and poverty attracts poverty. If you don't temper that with regulation, the people will temper it with violence.

Re:Price discovery make distribution efficient (0)

Anonymous Coward | more than 2 years ago | (#37800666)

No in this case it is gouging (have enough of a econ degree to even see that and see why it bad business to do it).

If you have 10k of something sitting on shelves one day and then the next the price has doubled. Because you *might* 3 months from now not be able to put as much on the shelves is called price gouging or profiteering.

http://en.wikipedia.org/wiki/Price_gouging [wikipedia.org]

For what you are talking about there would have to be 50 of the drives in the world. These guys make millions of them per year. There is *PLENTY* of inventory and *PLENTY* of competition. This is just retailers taking something they already have on their shelves and taking advantage of the situation. Not a perfect economy. That would be when they pay more they go ahead and raise the price. But they already paid for these goods... They are already a sunk cost. Meaning they are actually leaving money on the table. If you had paid attention in class they are not having MR=MC.

This sort of behavior people remember. There was a gas sub station that blew out during Katrina and there was a literal gas shortage here. One guy raised his prices to 9 bucks a gallon (nominal prices were 4-6 bucks depending on if they could get it). 1-2 weeks later the gas was running again. Within a year they closed that station. Why? People remembered him taking advantage of it and no longer shopped there.

Short term gain can cost you long term customers.

Re:Price discovery make distribution efficient (1)

Mr 44 (180750) | more than 2 years ago | (#37800108)

Perfect! If you can wait for your hard drives, by all means please do! Since there is now limited supply, you are leaving them for those who need them now (and are willing to pay for the priviledge).

Re:Price discovery make distribution efficient (1)

Lando (9348) | more than 2 years ago | (#37800532)

I agree, they are raising their prices based on a perceived crisis. But under our economic system, price for goods is not tied to cost of production or supply, but by what the greatest net income can be received. Capitalism assumes that everyone is fully informed regarding all issues, since people are limited in time and information, it's not quite a perfect system. The store owners are just using the news that hard drive manufacturing has been hurt to artificially raise their prices. We'll see how it works out. Since not all wholesalers are raising their prices, shopping around will still get a decent price and willing people to sell the stock they have on-hand. I can't imagine the floods have already reached the supply chain, especially for drive manufactures not located in the flooding so the raise in pricing is strictly artificial trying to capitalize on a perceived shortage rather than an actual one.

Re:Price discovery make distribution efficient (1)

Ichijo (607641) | more than 2 years ago | (#37800616)

This isn't efficient distribution, this is gouging.

Gouging is when a retailer sets the price higher than the market equilibrium rate where supply equals demand. If the price retailers have set creates a surplus, then there is gouging.

In this case, because there is no surplus because retailers are rationing by "limiting hard drive purchases to 1-2 drives per person," there is no gouging.

A more subjective definition of gouging is setting the price higher than some person is comfortable with. The term is often used in this manner by advocates of authoritarian governments to criticize the way capitalism efficiently allocates limited resources.

Re:Price discovery make distribution efficient (2, Insightful)

j00r0m4nc3r (959816) | more than 2 years ago | (#37800768)

This is definitely gouging. There is no supply shortage yet. Retailers are hiking prices on the anticipation of a shortage, which may or may not come to pass. There is a definite difference.

Re:Price discovery make distribution efficient (0)

Anonymous Coward | more than 2 years ago | (#37800054)

those, who truly need whatever the resource (HDDs in this case) to come up with the largest bid on it

Capitalism may be many things, but arbiter of need it is not.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800058)

of-course it is. It's the only real and honest arbiter of need, because it's the only true way to discover a price - to bid for it.

Re:Price discovery make distribution efficient (1)

Atlantis-Rising (857278) | more than 2 years ago | (#37800114)

The idea that need can be determined by bid price assumes everyone has equal resources with which to bid.

If someone is auctioning off a steak, and you are starving and have no money and I am wealthy and not hungry, the fact that I can bid $5 for the steak and you can bid $1 does not mean I need it five times more than you.

Quite the opposite, in fact.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800268)

You have just given an example that I will use to explain to you where your logic is flawed - if the stake is too expensive, then it means you cannot have it because the market efficiency was found.

If you have little money, it means you can't buy something that is too expensive for you, but this doesn't mean the market doesn't work! It works perfectly fine here as well. If stakes are bid on and there are only enough stakes and enough bidders so that the price is found at $5 for the stake, this means that the stake is sold at the most efficient price.

You shouldn't be trying to buy the stake then. If you are hungry and have $1 only and this stake is $5, it doesn't mean that you have a 'moral' right to that stake. This means that whoever paid $5 needs that stake AND can afford that stake.

OBVIOUSLY if the stake that somebody is willing to pay $5 for was sold at $1, that would be inefficient, and now you can turn around and make a profit. Sell that stake at $5 and put $4 into your pocket.

What you should do with that $1 is go to McDonalds and get something else to eat that they sell efficiently at those prices.

Re:Price discovery make distribution efficient (1)

JonySuede (1908576) | more than 2 years ago | (#37800060)

It definitely beats artificial rationing.

but it is rationed, from the summary :

even limiting hard drive purchases to 1-2 drives per person.

So it is then an hybrid approach to resource allocation. A market operating under regulations...

Hybrid approaches that takes into account the wide spectrum of behaviours generated by life/physics/the universe random number generator know as god, are almost always better than those that repose on a binary world view that classify things in us/them, good/evil,etc... Most Manichean solutions to societal problems usually ends up in worsening them.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800238)

You should go back to this thread and read from the top. I address this - this is NOT a good idea and it doesn't work, because it immediately creates a secondary market, which will discover the price more perfectly (read - it will raise the price further to gain more efficient distribution).

You can re-enter the store, you can enter multiple stores, you can ask others to buy the drives for you, etc. The correct behavior is to raise the prices enough, so that only those who really need them buy them, but if the prices become too high, so that nobody buys, then you lower them a little and see what happens. That's basic market price discovery and it allows to queue up the resources for most efficient consumption, because some people can wait until the prices fall down, but some people need their drives, and if the prices stay low, they will NOT get their drives, because others will just buy them (and may resell them too.)

As to regulations - only market regulations are real and work, I am not sure what you mean by regulations your sense though, I'll leave at the fact that market IS regulating - the prices are higher and there is scarcity, but market will regulate further, and if prices are not high enough for most efficient distribution, there will be secondary markets. Somebody will buy those drives just to resell them at higher prices, which is really a good thing - this is what maximizes market efficiency.

Re:Price discovery make distribution efficient (1)

Daniel_Staal (609844) | more than 2 years ago | (#37800424)

It's likely only retailers who are limiting numbers of purchases. If you are big enough to really need a large quantity of drives, then you can buy from a wholesaler, or direct, and they'll probably sell as many as you would want.

The point of the rationing is that the retailers want to prevent speculative hoarding, where someone hears that the price has gone up, buys all they can, and then sells just a few at a higher price. (Reducing supply further, as they aren't actually doing anything with the drives, besides keeping them from the market.) It also means the retailers can present themselves as responsive to their customers (as they have the drives on hand to sell), and they can take advantage of further developments in the market over the next few days. (As prices spike under fear.)

They are acting to increase their profit, and their reputation at the same time. Perfectly logical capitalistic behavior.

Think of it this way: The retailers are speculating that the princes will rise still further. So they are preserving their stocks to sell at the (true) higher price, once it becomes apparent.

Re:Price discovery make distribution efficient (1)

roman_mir (125474) | more than 2 years ago | (#37800504)

Why are you replying to me with that?

As to rationing - whatever their believes are, they are wrong. This doesn't work and it only can lead to some corruption (well, I don't know if this case is big enough for that, but in principle). It can lead to corruption, same type of corruption you observe with ticket scouts, who are the only ones that the tickets will be sold to in many cases, because they know the sellers at the theaters and prices are artificially lowered by gov't regulations, thus inefficiency created where true efficiency could easily be found by just raising the prices and allowing price discrimination at the theater cash register, which would put scouts out of business, by the way.

Re:Price discovery make distribution efficient (1)

wisnoskij (1206448) | more than 2 years ago | (#37800320)

I think you are confusing "truly need" with "rich".

Re:Price discovery make distribution efficient (0)

roman_mir (125474) | more than 2 years ago | (#37800356)

Actually it maybe one and the same.

To make a simple point: a person can only pay so much for disk drive, but a company can pay more. However a person is maybe willing to wait to see the prices come down (people wait all the time when new tech comes out for example, and the first ones to buy are normally 'rich' or companies).

However a company may need the disk to be PRODUCTIVE. In reality the 'rich' are most likely to be more productive with the goods than just those, who buy to CONSUME, because those who are 'rich' (as I said, companies often are richer than single individuals), are willing to pay the premium because it's important for their business.

Any productive business is more important than any consumer for the economy. Of-course in most of the western world (including USA), people lost understanding that it's production that drives the economy, not consumption. It's businesses that create jobs and it's businesses that pay salaries and build products.

--
Of-course it can be just a richer individual than you (there is always somebody richer than you, unless you are maybe Warren Buffet or Gates or Putin and such), so obviously if the product is SO SCARCE that the prices has to go up to the levels where only the richest people can buy and they are willing, this is STILL finding efficiency for the seller!

They are not in business of charity, those stores as I understand, right? They are making a profit and if what they are selling SELLS at much higher prices, they should definitely sell at those prices.

Do you know what happens when there is inefficiency in the market and a store doesn't sell at the most efficient price, say it sells much lower than the price should be?

Secondary markets - that's where somebody buys and resells the stuff for profit. They are right to do so too, by the way, never mind how objectionable you may find the practice.

Can you say gouge? (4, Insightful)

Anonymous Coward | more than 2 years ago | (#37799922)

Jesus titty fucking christ.
From 75 to 100 dollars in one day. http://www.newegg.com/Product/Product.aspx?Item=N82E16822136697

Its like the industry is begging for SSDs to take their market. /begging/

This isn't supply shortage it's price gouging. The industry has consolidated to four players, and one of them only makes laptop drives. Expect more of this shit in the future. Expect an SEC probe too and finding of price fixing, followed by a slap on the wrist a decade later. Fire in a dram factory anyone? Fuck me.

Re:Can you say gouge? (0)

Anonymous Coward | more than 2 years ago | (#37799978)

Can you say supply and demand?

Re:Can you say gouge? (1)

skr95062 (2046934) | more than 2 years ago | (#37800006)

Are you referring to the accidentally on purpose fire in the Japanese memory factory in the 90's?
The very next day memory prices just about doubled.
Absolutely nothing was done about it even though everyone knew that the retailers were price gouging.
I remember one retailer quadrupled their prices and made a killing.
Never dealt with them again.
Supply and demand is one thing deliberate gouging is another.
What is happening now is NOT supply and demand it is plain and simple greed, price gouging is a side effect.

What do you mean nothing was done (1)

Sycraft-fu (314770) | more than 2 years ago | (#37800124)

They got sued for collusion and price fixing, and lost. Took a long time, of course, the law doesn't tend to move fast, but it happened. I received notice of the suit and eventually a tiny part of the settlement back in the day.

Don't go claiming "nothing happened" for an incident just because you didn't hear about it. Most things aren't front page news.

Re:What do you mean nothing was done (1)

skr95062 (2046934) | more than 2 years ago | (#37800194)

I was talking about the retailers in my area that pulled this crap.
Nothing, absolutely nothing was done to them.

the invisible telepathic hand (1)

epine (68316) | more than 2 years ago | (#37800046)

This isn't supply shortage it's price gouging.

It's not a big step from the invisible hand (hard enough to conceptualize) to the invisible telepathic hand, where markets allocate goods to their highest utility without the price ever changing.

Interesting to watch loss aversion shuttle the pea under the conspiracy shell after a tourettic stir fry in the amygdala.

Meh... (1)

mindflux (122573) | more than 2 years ago | (#37800022)

I bought 6 Seagate Savvio 300GB (2.5" SAS 10k spin) drives yesterday. They were $199 (relatively cheap) and now are $267 or higher at most eTailers.

I'm sure most of it's fear mongering but some "analysts" have suggested it may take "several quarters" for the drive mfg's to recover from this. So I figured why chance it and bought what I needed rather than deal with potential inflation for 2 years.

Re:Meh... (1)

ackthpt (218170) | more than 2 years ago | (#37800210)

I bought 6 Seagate Savvio 300GB (2.5" SAS 10k spin) drives yesterday. They were $199 (relatively cheap) and now are $267 or higher at most eTailers.

I'm sure most of it's fear mongering but some "analysts" have suggested it may take "several quarters" for the drive mfg's to recover from this. So I figured why chance it and bought what I needed rather than deal with potential inflation for 2 years.

As the economic model plays out (unlike the ways politicians make stuff up) if other manufacturers have untapped capacity they will ramp up their capacity to take advantage of realizing higher sales (and potentially profit) The market is elastic and prices will adjust again. (This is the stuff I found so utterly fascinating while studying economics, when you see real markets behave as expected.)

This just in: climate change now affecting geeks. (0)

Anonymous Coward | more than 2 years ago | (#37800034)

Geeks and download junkies will now have to pay more for their storage after Mother Nature ups the anti in her latest revenge flooding.

Also, people are dying (4, Insightful)

Baloroth (2370816) | more than 2 years ago | (#37800094)

Over 300 people have died (not huge, I know, but still not small... and the fact that I can say with all honesty that 300 deaths seems small says volumes by itself), homes and lives are ruined, ancient temples are threatened... and what Americans are most worried about is the fact that they have to pay an extra 20-30% for hard drives. Just to put this in perspective. TFA does at least have the decency to issue a "our hearts go out blah blah" at the end.

Just watch, the next story will be something about Occupy Wall Street and people protesting those huge companies and all the cheap goods they make. Really, Americans (and most of the rest of the world) really need to look closely at the consumerism that has overcome our culture to the point people dying seems far less significant than money. I realize this is a tech/ nerd site (so it wouldn't focus on the deaths anyways), but still, this is the second story about this with no mention (as far as I remember) about all the other effects this flooding is having.

Re:Also, people are dying (0)

Anonymous Coward | more than 2 years ago | (#37800222)

I could argue, because of the sheer volume of HD sales, that the economic impact of hard drive price increases far exceeds the total economic impact of 300 workers in Indonesia. Of course, that doesn't count damage to infrastructure and loss of property and productivity in the area.. .. But a 30% price hike in a technology that pretty much every other computing tech relies on for data storage is a staggering ammount of money.

And yeah, 300 dead is bad. But disasters happen and people die. Those that survive go on. If you want to see shit caused by flooding, visit Pakistan sometime. Huge parts of the country more or less destroyed and the badly run government more or less can't do anything about.

Re:Also, people are dying (1)

g4pengts (1050568) | more than 2 years ago | (#37800306)

300 deaths is bad. But implying that a tech oriented site reporting the economic effect on a piece of technology due to a natural disaster is wrong seems a bit odd to me. We can provide our supports to the people in the disaster area while contemplating how said disaster affect global economy at the same time. We don't need to choose just one.

Re:Also, people are dying (0)

Anonymous Coward | more than 2 years ago | (#37800446)

Bad things happen to good people. It sucks, and I truly wish they didn't. However, if I worried about the suffering of humans beings that I have never met, I would be very miserable 100% of the time. There is always something bad happening to someone. I already suffer enough by empathizing with the problems of people around me.

Under those circumstances, the only sane thing to do is not to worry about it. If you can donate some money to charities helping them out, do so. If you're in the area and can lend a hand in some way, do so. Talking about how it's so very sad that people are dying accomplishes nothing, though. If you can't do anything to actually help, then do the next best thing: don't worry about it, and worry instead about that which does affect you, in this case, hard drive prices.

Re:Also, people are dying (5, Interesting)

girlintraining (1395911) | more than 2 years ago | (#37800658)

The Occupy protests are centered around the fact that the wealth distribution in the United States is ranked about the same as Uguanda; Half the wealth in this country is controlled by approximately 1% of the population, which is the reason for the slogan "We are the 99%". Occupiers have been protesting financial institutions, especially banks.

Now if you hadn't had gone and shot your mouth off about something you clearly don't know anything about, I might have had a bit more sympathy for the rest of your argument. However, I'm going to have to mercilessly gut it now because I am the 99%, and I also have a healthy respect for capitalism -- within limits.

300 lives is nothing. About 120 die every day in auto accidents. Americans are more worried about gas prices there too. Is that because they're heartless? No, it's because those 300, or 120, or a hundred million lives are abstract people. I've never met them. You haven't met them. Nobody who reads this is very likely to have met them. They lived in total obscurity and then some natural disaster came along and went squish, and that was that. They have had little to no bearing on my life, or yours, or anyone's here. But the price of those goods -- that is something tangible, noticable, and therefore real.

You're bitching about human nature here, man. You're like Bono from U2. Nobody gives a damn about them and they shouldn't. They can't. We all got only a limited amount of time on this earth, and a limited amount of resources, emotional or otherwise. And the overwhelming majority of people are going to invest their emotions in things that are real, tangible, and close to them.

Now next time you feel like trying to go and take the moral high ground, don't piss on someone else's back and then say it's raining, mmkays?

Re:Also, people are dying (0)

Anonymous Coward | more than 2 years ago | (#37800714)

Over 300 people have died

Over 300 people die every day in motor vehicle accidents.
Over 300 people die every day from cancer.
Over 300 people die every day... well you get the idea.
Over 150 THOUSAND people die [wolframalpha.com] EVERY DAY.

Do you weep for all of them?
Oh, and in the time it took you to read this post, another 10 people died. Better buy another box of kleenex.

Re:Also, people are dying (1)

cheekyjohnson (1873388) | more than 2 years ago | (#37800786)

Different people have different priorities. Some may not care too much about the lives of a select few strangers because those strangers don't influence their lives in any way. Though, the increase in hard drive costs might.

People die all the time. When it's a stranger (especially one from another country), I doubt the average person cares too much about it.

Re:Also, people are dying (0)

Anonymous Coward | more than 2 years ago | (#37800788)

Look, people die all the time across the globe for many reasons - does it affect you? No. Does the price increase of hard drive affect you? Yes. It's not insensitivity or rampant consumerism, it's simply a case of not feigning emotional attachment to people who you never knew existed.

Some died while I was typing this, why aren't you mourning for them?

The tipping point to SSD's? (1)

Above (100351) | more than 2 years ago | (#37800178)

SSD's have been gaining on hard drives for some time for a number of reasons, but price has been the primary area where HDD's could compete. With this event causing HDD's to be more expensive, is it finally the tipping point to SSD for most consumer products?

Re:The tipping point to SSD's? (2)

Bucky24 (1943328) | more than 2 years ago | (#37800300)

I suspect it's still a lot cheaper to buy a 1 TB hard drive than a 1 TB SSD (or 1024 GB SSD I suppose), if they even exist. But you do have a good point.
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