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NetApp, Lenovo Raise Prices, Citing Thailand Flooding Effects

timothy posted more than 2 years ago | from the prices-integrate-anticipated-demand dept.

Data Storage 96

Lucas123 writes "First HP, then EMC, and now NetApp has hiked up the price of its hard disk drives by 5% to 15%. The vendors sent letters to users stating that the flooding in Thailand had caused major component shortages, and while they tried to absorb the supplier price increases, each had to eventually give in. Lenovo also announced it has run out of certain drives for its PC systems including some popular 7,200rpm models."

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dicks everywhere (-1)

Anonymous Coward | more than 2 years ago | (#38620552)

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    /\) ( Y)  \ \
   / /   ""   (Y )
  ( Y)  _      ""
   ""  (/\       _
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        (Y )   / /
         ""   ( Y)
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dicks everywhere, long live the GNAA

I'm starting to wonder about this (3, Insightful)

msobkow (48369) | more than 2 years ago | (#38620564)

Are they seriously saying there are NO other plants in the world to take up the slack? The entire industry put ALL their eggs in one basket?

Has no one ever heard of having multiple supply chains before?

What the hell is management doing?

Re:I'm starting to wonder about this (5, Insightful)

beelsebob (529313) | more than 2 years ago | (#38620604)

No, they're seriously saying that a lot of production was there, and that if you take even 40% of production away, you still have major shortages. You don't build plants to produce nearly twice as many drives as there's demand for, just because it may be that some massive natural disaster comes along.

Re:I'm starting to wonder about this (2)

DCTech (2545590) | more than 2 years ago | (#38620620)

It's a cost saving issue. Having multiple plants doubles or triples the expenses and is a logistics nightmare. This would mean that laptop prices would skyrocket in no time. Paying 5-15% more for hard drives for a while is much cheaper than paying double amount for whole laptops all the time. And since someone is going to cut those prices, it means they all need to.

Stuff like this doesn't happen often either. There haven't been such catastrophic floods in Thailand for 30 years. Sometimes shit happens.

Re:I'm starting to wonder about this (3, Interesting)

fred911 (83970) | more than 2 years ago | (#38620778)

Last time I remember something like this happening was in the early 90's when the cost for sim memory shot up almost overnight due to a fire in a chemical plant. At that time I sold about 30 used, pulled, 4 meg sims for like $125 usd almost overnight. Major panic.

  But, one would think these days, buyers would have futures to end this type of supply problem.. Like every other manufacturing industry.

Re:I'm starting to wonder about this (1)

fred911 (83970) | more than 2 years ago | (#38620806)

The aforementioned price was per sim.

Re:I'm starting to wonder about this (3, Interesting)

Kjella (173770) | more than 2 years ago | (#38621152)

But, one would think these days, buyers would have futures to end this type of supply problem.. Like every other manufacturing industry.

Futures only set a price, they don't magically mean that a factory that's underwater will still deliver. Contracts typically have a "force majeure" clause so they don't have to deliver in this case. And they will take priority, so the more is secured with futures the worse the price changes in the open market will be. You can't make a shortage go away with contracts.

Re:I'm starting to wonder about this (-1, Troll)

Hognoxious (631665) | more than 2 years ago | (#38625304)

GP is modded higher than you. Don't you just despair sometimes?

Re:I'm starting to wonder about this (1)

msobkow (48369) | more than 2 years ago | (#38620876)

Not true at all. There are limits to economy of scale, so it's not necessarily cost-prohibitive to have a few plants scattered around the world.

It's just EASIER to have a few big plants. But then you risk supply shortages like this one.

Re:I'm starting to wonder about this (1)

msobkow (48369) | more than 2 years ago | (#38620880)

And obviously you shouldn't have all the plants in one district in case of natural or man-made disaster!

Re:I'm starting to wonder about this (0)

Anonymous Coward | more than 2 years ago | (#38620938)

What's it to them (hard drive manufacturers)? Supply goes down, demand remains, price goes up. Same difference.

Re:I'm starting to wonder about this (1)

Hognoxious (631665) | more than 2 years ago | (#38628314)

There are limits to economy of scale, so it's not necessarily cost-prohibitive to have a few plants scattered around the world.

I suspect that there are people within the industry who know those limits somewhat better than you do. How do you think a major corporation makes a decision like this? Do they get a load of bean-crunchers and number-counters to work it out, or close their eyes and throw darts at a map?

It's just EASIER to have a few big plants.

For a business easier translates to less effort, which translates to less labour, which translates to less costs, which translates to cheaper.

Having redundancy costs (3, Funny)

YA_Python_dev (885173) | more than 2 years ago | (#38620628)

At this point I suspect it would be more cost-effective for the rest of the world to pay a one-time contribute to relocate the entirety of Thailand somewhere less affected by natural disasters.

Re:Having redundancy costs (3, Funny)

ColdWetDog (752185) | more than 2 years ago | (#38621768)

At this point I suspect it would be more cost-effective for the rest of the world to pay a one-time contribute to relocate the entirety of Thailand somewhere less affected by natural disasters.

I suggest they move it all to Alaska. We don't have any good Thai food here (yet).

Re:I'm starting to wonder about this (0, Insightful)

Anonymous Coward | more than 2 years ago | (#38620654)

The entire industry put ALL their eggs in one basket?

That statement implies one controlling entity for the whole industry - one person, a board, etc .....

Has no one ever heard of having multiple supply chains before?

That statement implies you know better and I've stated the obvious to you; which means I'm not going to go on explaining about balancing costs of producing things, where talent and infrastructure exists, and other things that go into the decision as to where to place a factory.

What the hell is management doing?

They're taking the cheapest and easiest way out.

Good grief! It's common sense dude!

Re:I'm starting to wonder about this (3, Insightful)

Genda (560240) | more than 2 years ago | (#38624278)

Sadly most corporate management has trivialized the importance of planning for the growing strength and frequency of precisely this kind of natural disaster. Global climate change is clearly happening and whatever its cause, it makes good solid predictions of where to be careful and where to be safe. Heavier flooding particularly near large bodies of water and tropical regions is well understood. Lowlands will experience more frequent and substantial flooding events. Wildfires and social impact to local populations will be significant as the growing number of flooding and drought events hit tropical and temperate zones around the world.

Business needs to stop politicizing climate change, and begin using the data to protect production in the face of growing environmental instability.

Re:I'm starting to wonder about this (5, Insightful)

Hadlock (143607) | more than 2 years ago | (#38620698)

Someone famously said that the distance between the platter and the read head is roughly equivilent to flying a 747 over Mt Everest with one inch to spare. It's not like joey and bubba can buy two pallets of platters, three pallets of drive cases, and a pallet of controller assemblies, a gallon of glue and assemble 20K drives in their garage over a weekend while burning through a pack of cigarettes. These aren't cuban sweat shop cigar factories, these devices are put together in enormous clean rooms with super tight tolerances.

Re:I'm starting to wonder about this (1)

Anonymous Coward | more than 2 years ago | (#38620722)

Pardon me, sir. Joey and Bubba would most certainly smoke at least four packs of cigarettes over that weekend, and the airborne particulate matter from said smoking would ask a special "flavor" to the finished products. Please post accurate stats if you're going to post at all.

Re:I'm starting to wonder about this (2)

gomiam (587421) | more than 2 years ago | (#38620918)

According to Upgrading and Repairing PCs [google.es] it would currently be like having 4 Sears Towers floating on their sides, side by side, 5mm over the ground moving at almos 7800 kilometres per second while reading 2 centimetres long bits on tracks 30 centimetres away from each other.

Re:I'm starting to wonder about this (1)

drinkypoo (153816) | more than 2 years ago | (#38620940)

Over a "perfectly" flat ground, yes, and with the Sears tower reshaped to take advantage of ground effects. If you adjusted your metaphor to account for the roughness of the earth, it wouldn't work at all, which is why the 747 thing works... well, less badly.

Re:I'm starting to wonder about this (1)

gomiam (587421) | more than 2 years ago | (#38621508)

The original analogy didn't talk about the Everest either. I guess Hadlock added it for effect. But just for the fun of it, let's bring it all to Everest sizes so... 15nm turns into 8848m, 590e9 bigger. 0.049 inches (head length) turns into 28,9e9 inches, some 73e9cm. Let's say 7.3e8m or 730000km. Never heard about a plane that big, did you? ;)

Re:I'm starting to wonder about this (0)

Anonymous Coward | more than 2 years ago | (#38621550)

So I'm guessing they are built in AFRICA by AFRICANS then...

Whoops! I forgot, we aren't allowed to tell the truth nowadays, are we... even when our countries are being INVADED by millions of 'enrichers'...

Re:I'm starting to wonder about this (1)

Kagato (116051) | more than 2 years ago | (#38622626)

Yes and no. Hard drives is a bit of an interesting business. Western Digital and Seagate are still market leaders globally because certain components are still only made in the US. The real precision work isn't done overseas. Which is why the chinese never got a foot hold in the market. What's happening overseas is more akin to final assembly. And before Thailand was the Hard Drive capital, Singapore held that title. So it's not like there aren't alternative facilities. Still, these companies made a big investment in Thailand, given the prices of SSD are still pretty darn high, a supply shortage and a price hike isn't exactly a bad thing really.

Re:I'm starting to wonder about this (0)

Anonymous Coward | more than 2 years ago | (#38620726)

Management is boosting bottom lines. And what better way to do it than to work less and earn more? A bit of FUD, added over flood, makes a lot of good - to a company bottom line. And we already know what management is about, don't we?

Re:I'm starting to wonder about this (0)

Junta (36770) | more than 2 years ago | (#38621144)

When your supply chain choices dwindle down to about two companies (Seagate and Western Digital), there's only so much you can do. All the other vendors have been 'consoloidated' into those two.

Re:I'm starting to wonder about this (1)

justthinkit (954982) | more than 2 years ago | (#38622544)

Isn't this the real point. Consolidation has allowed just two companies to control everything, including prices. I bet these two have two or three times the capacity needed, but wouldn't dream of messing with the windfall this "extended" natural "disaster" has brought.

Re:I'm starting to wonder about this (1)

haruchai (17472) | more than 2 years ago | (#38624030)

If they did have the manufacturing capacity elsewhere to compensate for the loss of output in Thailand, they'd probably claim increased labour costs and jack up the prices anyhow. We can't win when there's this much consolidation in the market.

Re:I'm starting to wonder about this (0)

Hognoxious (631665) | more than 2 years ago | (#38625394)

I bet these two have two or three times the capacity needed

I know for a fact that WD have a huge reserve plant where they pay the workers to sit and play cards all day, just to keep supply low and prices high. Seagate have two smaller ones, but they keep the workers in suspended animation.

They're on Numenor, Atlantis and Lyonesse.

Re:I'm starting to wonder about this (1)

AvitarX (172628) | more than 2 years ago | (#38625572)

If they actually controlled the prices, then the flood would of effected nothing. The fact that a supply shortage resulted in a steep price increase shows that the market is actually working as a market. Were there no shortage and prices shot up, that would be evidence of market manipulation, and if prices stayed the same even though there was a shortage it would be stronger evidence.

Suppliers that manipulate price charge the most they possibly can, in a market prices fluctuate with supply and demand.

This is actually probably healthy for the industry, based on how low prices were getting, and the consolidation mentioned, along with competition from new players (SSD manufacturers), there was most likely an over-supply of HDDs, pushing prices too low to be sustainable.

This flooding may be the only thing that keeps us with 2 suppliers in the long run.

Re:I'm starting to wonder about this (1)

billcopc (196330) | more than 2 years ago | (#38624620)

What I personally don't understand is why is it taking so long to resume production elsewhere ? When a multi-billion dollar industry is threatened, I would expect them to take some of those billions and poop out new facilities at ludicrous speed.

Re:I'm starting to wonder about this (1)

Hognoxious (631665) | more than 2 years ago | (#38628262)

What I personally don't understand is why is it taking so long to resume production elsewhere ?

What I personally don't understand is people like you aren't doing it rather than asking dumb questions.

Perhaps it's not as easy as you think.

Re:I'm starting to wonder about this (1)

billcopc (196330) | more than 2 years ago | (#38652438)

You're right. I should totally fly over there and apply my network and software expertise to building a manufacturing plant. Or not.

I do disaster planning for local businesses, big and small. My clients plan for various levels of disaster. For some, it means having a second building in a nearby city, fully furnished and ready to go live should the main office be affected in any way, be it a power outage, hurricane, or false-flag terrorist attack. For others, it's a matter of making sure everyone has a good PC at home for telecommuting when we get another icestorm or flood.

For a billion-dollar, multinational manufacturer, I would expect their disaster planning to include the possibility of shuttering an entire country's facilities without missing a beat. Sure, in hindsight they will probably take such precautions in the future, but they will be feeling the pain of this mistake for years to come, as this is exactly the kind of thing investors shit bricks over.

Imagine... (1)

Anonymous Coward | more than 2 years ago | (#38620568)

Imagine a world where we require those we benefit from to be treated equally regardless of their place of residence.

Imagine that a business employing or contracting out to foreign states must ensure that the workers he exploits receive the same protections as if he were employing directly in the country to which he sells.

Imagine that, rather than receiving tax breaks for offshoring, we ensure that the tax burden of an offshorer can be no lower than someone choosing local employees.

In short, imagine a level playing field rather than the monstrosity of abuse produced by the WTO.

Prices wouldn't be much higher for the end consumer - we'd perhaps return to more reliable machines with a higher initial cost which are used for longer, but that's only a positive. But profits would be lower.

Re:Imagine... (1)

Anonymous Coward | more than 2 years ago | (#38620590)

World trade equality, would indeed be an improvement.
The problem is that the MHz myth and friends have put us in a situation where we feel we need bigger/better computers that we actually do.
I'm in the minority where we actually wear computers out (not just the disks), even when we could afford new ones. I'm not doing more demanding tasks than I was 5 years ago, so whats wrong with a 5 year-old computer?

Re:Imagine... (-1, Redundant)

Anonymous Coward | more than 2 years ago | (#38620614)

Try rendering 5000 frames from a very complex scene full of particles on a computer that's five years old. I'll see you in a couple of months......

Re:Imagine... (1)

Elbereth (58257) | more than 2 years ago | (#38621102)

A five year old PC could have a Core 2 Quad Q6600, three Nvidia 8800GTXs in SLI, and 8GB RAM. That's still pretty powerful, even if it's a joke compared to the workstations that you're using in that complicated render. I'm not sure how well that system would play Skyrim, but I suspect that it'd be able to hold its own quite well. My own system is a Core 2 Duo (E6750), 8800 GTS 512, and 4GB RAM. Skyrim might be the application that makes me finally upgrade my system, after four years. I never found anything that stressed my system, though I had to back down a little on the anti-aliasing over the years.

My ex-girlfriend was even able to play some modern PC games on her netbook, though many were a real test of patience. Also, the resolution was extremely limited (1024x600). However, I think that a lot of geeks really over-estimate the importance of staying on the upgrade treadmill. Having an out-of-date, obsolete computer really isn't the end of the world, if it does everything that you need it to do, and it can still get the job done in a reasonable period of time. Obviously, if you need to upgrade (such as reducing the render time from months to days or hours), then you should. But if you're just playing Flash games on Facebook, posting to Twitter, and watching streaming movies on NetFlix, what incentive do you really have to upgrade that system? It's just not going to perform any of those jobs any better or any faster. The best you can really hope for is that it will be more energy efficient and/or give an overall better experience (ie, multitask better, as you add more memory and cores).

Re:Imagine... (1)

pixelite (20946) | more than 2 years ago | (#38622576)

But if you're just playing Flash games on Facebook,

I just upgraded my brothers computer, a six year old economy diy I built him because his hard drive crashed. Built him a new pc because he was thinking of upgrading anyways. He wanted to be able to play his flash games on facebook without his pc slowing to a crawl.

Re:Imagine... (4, Funny)

Gadget_Guy (627405) | more than 2 years ago | (#38620724)

I'm in the minority where we actually wear computers out (not just the disks), even when we could afford new ones. I'm not doing more demanding tasks than I was 5 years ago, so whats wrong with a 5 year-old computer?

How about a bit of compassion for those Russian hackers who are also using your computer. Why should they have to put up with sub-standard hardware to run their botnet?

Jeez, some people just have no sense of helping the community!

But seriously, I think that in this day of ever more powerful smartphones, an increasing number of people are wearing their computers out.

Re:Imagine... (0)

Anonymous Coward | more than 2 years ago | (#38620990)

Waste your own life waiting for results from an obsolete machine. Knock yourself out.

Contrast with consumer hard drive prices (4, Insightful)

shoppa (464619) | more than 2 years ago | (#38620632)

All the consumer hard drive retailers (e.g. Newegg, microcenter, anywhere) hiked hard drive prices by 200-400% months ago as a response to the floods. I know the big name storage vendors spend less on spinning media and more on, well, overhead and profits, but they come out looking like good guys if they only hiked their prices 5 to 15 percent.

Re:Contrast with consumer hard drive prices (1)

HBI (604924) | more than 2 years ago | (#38620670)

If their intent is to sell hard drives at this point, they need to fix the prices. I'm just not buying anything until they get back into the reasonable range. The only way to make them do so is to not buy anything. The price increases amounted to gouging.

It has a follow-on effect also, I am also not buying any CPUs or motherboards.

The cartel pricing on hard drives is the problem.

Re:Contrast with consumer hard drive prices (1)

DarkOx (621550) | more than 2 years ago | (#38620718)

I am not sure I can agree with. Outside this little "event" hard drive prices have been pushing through the floor. I can hardly think of anything that has gotten cheaper faster. Perhaps the price of drive itself has remained somewhat constant over the last 6 years or so but the capacities have continued to jump. Think about what you paided for a 40Mb hard disk in '90, a 40Gb in '00, a pair of 200Gb disks in '05 and what a couple of 2Tb disks, went for before the flood.

Frankly with all the consolidation the industry has undergone I am actually surprised it remains as competitive as it does and we don't see "cartel pricing", okay maybe there is a huge conspiracy and this is the start of it but I kind of doubt it.

The simpler explanation is allot of, by no means all of production came out of areas affected by the floods. Hard-disk manufactures are not out of drives they can provide them to system builders and the consumer market alike. You can go to NewEgg.com now order a disk and it will likely ship Monday. Prices are higher though because there are constants on production at this time, and costs to rebuild that must be recouped. In that situation assuming you are not affected and your competitors are, or you and your competitors are affected you raise prices until the demand falls to the volume you can produce so as to maximize profit. Its ECON 101. The only reason you would not hike prices is if you have competition that can take up almost all the slack and you want to limit how much market share they take from you.

There is no conspiracy required here.

Re:Contrast with consumer hard drive prices (3, Informative)

HBI (604924) | more than 2 years ago | (#38620950)

Link to FT article [ft.com]

Key quote:
"Roughly 25 per cent of all global hard drive assembly facilities are located in Thailand, according to industry tracker iSuppli, which said supply would be constrained until the fourth quarter of 2012."

75% of the manufacturing capacity is unaffected. 25% was affected, though production was restarted back in December. The prices remain at about 200-250% of pre-flood prices, even for producers completely unaffected by the floods. Check Newegg yourself... This amounts to "not gouging" and "not cartel pricing" how?

Re:Contrast with consumer hard drive prices (1)

fnj (64210) | more than 2 years ago | (#38621134)

It's the invisible hand of the market, friend. The invisible hand groping and raping consumers.

It doesn't cost a fucking penny more to make the drives in Korea or China than it did last year, but less are being made in Thailand; there is a general shortage, so the market pokes the consumer up the ass for *all* drives being made *anywhere*. Company X or plant Y is unaffected by the shortage at all, but the market sets that company's price the same as that of other companies. The market guarantees that selfish bastards gouge consumers.

Do you *really* think it costs over $100 to pump a barrel of oil out of the ground and sell it? It's the market being manipulated.

Re:Contrast with consumer hard drive prices (4, Insightful)

itsme1234 (199680) | more than 2 years ago | (#38621154)

First of all at least please read the link you provided: "iSuppli also said the flooding may have affected operations of Nidec Corporation, a Japanese company that supplies more than 70 per cent of the motors in global hard drives."

Then, even if the numbers you quote are right I don't see any indication for "cartel pricing" or "gouging" or anything else. The fact is PAYING CUSTOMERS don't think the prices are high enough and they literally just don't stop buying. If you try to sell a now a drive at the "normal" price or even twice that it will just sell out and literally there aren't enough drives in the world to keep the drives on the shelves at prices before "crisis".
There is no arbitrary limit at which prices would stop. Even a difference of 1% between supply and demand can increase prices 10 (or 100) times if the customer just don't STOP BUYING.

Re:Contrast with consumer hard drive prices (3, Insightful)

TheLink (130905) | more than 2 years ago | (#38621738)

First learn something about economics: http://en.wikipedia.org/wiki/Price_elasticity_of_demand [wikipedia.org]

If there are enough people willing to pay 250% of the prices, why should IT retail companies sell stuff lower? They aren't charities.

In a theoretical world they each would now have 25% fewer hard drives to sell each month, that means fewer entire computer systems sold, which means lower total profits. Meanwhile they still have to pay the same rents to the landlords, the same salaries to their workers. So guess who they'll try to get the money from? Those who need hard drives badly enough. In the real world it'll be even worse and messier than that.

BUT if not enough people are willing to buy, the prices will go down, and the retailers will just have to make less or lose money. In my area, rumour is a large retailer has thousands of unsold drives so they will be reducing the prices to try to get rid of them before production gets back on track.

Imagine there's just about enough oxygen for everyone in the world, and everyone normally paid about USD1 per day. Assume also it's a free market capitalist world.

Suddenly there's a disaster and there's only enough oxygen for 75% of the world. How do you decide who dies? The evil socialists might have some committee do it and thus kill 25% off. But the free market capitalists will let the market decide - and so the price will go up, and likely more than 25% will die (the rich being able to easily afford USD10/day and more). Is that still considered gouging? Maybe. But is it cartel pricing? No - there is no need for a cartel to raise the prices.

Re:Contrast with consumer hard drive prices (3, Insightful)

zippthorne (748122) | more than 2 years ago | (#38624156)

There is no such thing as gouging [econlib.org] . There is only "price rises or falls to market-clearing levels."

First of all, if supply drops to 75%, the market price will of course be affected. And it will affect everybody selling whether they were specifically affected by the floods or not. It's a market price on a commodity product.

The effect is to shift the supply curve (on a P-S plot) temporarily to the right - at current prices, the supply is 75% of what it previously. This curve might be pretty flat in the short term, too. The demand curve is unchanged, of course, but the market price absent price controls (which would only result in shortage anyhow), moves to a new position - it is the intersection of the demand curve and supply curves.

You may be making the mistake I have seen many make in comments about this event that the price should rise 33%, making the total revenue the same as it was previously. This would only be the case in the event that the demand curve is linear and has an elasticity (slope) of -1. The linear assumption is ok for small perturbations (and, indeed, is what I used in the above paragraphs) and first year economics courses, but even with that assumption demand elasticity depends on many factors. It is folly to assume that it will be any specific value without actually doing research into the particular industry.

A brief rise in price isn't gouging. It's the market finding the new price, and is justified by the conditions. There are two things you might have been buying in the aftermath of the flooding - 1) a hard drive and 2) a hard drive right now. If you need #2, then you'll certainly be willing to pay more than someone who just needs #1 and can afford to wait for the price to spike and drop.

Re:Contrast with consumer hard drive prices (1)

HBI (604924) | more than 2 years ago | (#38627772)

There sure as fuck is a such thing as 'gouging'. If the stock of retailers is full of product bought at $2.00 and the price drops to $1.00 because of weak demand, they are still going to try to sell the shit at a markup based on the cost of goods already stocked, ie, $2.00. This is otherwise known as gouging, making people pay outrageous prices for a nonexistent shortage. There's plenty of stock.

Oil companies are notorious for precisely this.

Your handwaving about economics doesn't change this simple fact. The only shortage is a shortage of suckers willing to pay exorbitant prices. No one wants to take a loss, so the prices continue to suck and people continue not to buy hard drives.

I am a right winger and now I know why the lefties hate your type. Ye gods, you want people to LIKE getting fucked up the ass.

Re:Contrast with consumer hard drive prices (1)

Hognoxious (631665) | more than 2 years ago | (#38628290)

This is otherwise known as gouging, making people pay outrageous prices for a nonexistent shortage. There's plenty of stock.

It might be your definition of gouging, but it isn't mine. For me the article would have to be a necessity, and the supplier would have to have a (local) monopoly.

Don't want to buy at the prices they're asking? Do without, or go to their competitor down the road. If enough people do that, they'll end up with tons of unsold stock and they'll have to discount heavily to clear it.

The only shortage is a shortage of suckers willing to pay exorbitant prices.

On the contrary. It would appear that there are sufficient of them relative to the supply, or the "fire sale" situation I described above would be happening.

Re:Contrast with consumer hard drive prices (0)

Anonymous Coward | more than 2 years ago | (#38625580)

Same reason a disruption in the supply of oil from the North Sea makes the price of oil from Venezuela go up: basic supply and demand.

Re:Contrast with consumer hard drive prices (1)

Vegemeister (1259976) | more than 2 years ago | (#38621312)

paided

And the remarkable fact is that your post is otherwise coherent.

Re:Contrast with consumer hard drive prices (2)

Bravoc (771258) | more than 2 years ago | (#38621110)

I worked at NetApp for 11 years. The intent never was to sell hard drives, the intent was to sell the software; ONTAP, Snap*, etc.

Dan Warmenhoven used to tell people "give away disks, but sell the software licenses." They make almost nothing on drive sales, they make huge margins on the software

Re:Contrast with consumer hard drive prices (0)

Anonymous Coward | more than 2 years ago | (#38623074)

Color me skeptical because Netapp's additional drive prices, last I checked, were substantially higher than, say, newegg's.

Re:Contrast with consumer hard drive prices (1)

bipbop (1144919) | more than 2 years ago | (#38623816)

Netapp's biggest customers aren't paying those prices.

Re:Contrast with consumer hard drive prices (1)

Loki_1929 (550940) | more than 2 years ago | (#38627184)

Will Newegg get me an identical (and I mean right down to the EXACT model if not the same manufacturing run) replacement drive in my hands on site within 4 hours, 5 years after I bought the thing from them? Will Newegg replace an entire enclosure and all its drives extremely quickly and assist on site with migration if the device(s) sold reach an unacceptable level of hardware failures?

NetApp's never held a gun to my head. They offer storage, software, and services at a price. If you believe their price is not worthwhile, check with their direct competitors like EMC* (Note: please consult your cardiologist prior to doing this). If you don't think any of those vendors are giving you the combination of products and services which give you proper value, you're perfectly free to dial up Newegg, buy whatever you want from them, and let your career and your reputation hang on the hope that it all works out for you.

I love Newegg for my personal stuff and when I worked at a small consulting company we sometimes even bought stuff from there (as opposed to our regular distributors) depending on part availability, price, etc. Would I put my paycheck on the line to save my employer some money? No; I'll go through the RFQ process dealing with enterprise-level vendors, present my own analysis to the higher-ups regarding what we actually need versus what would be nice to have, and end up with the level of service and support that enterprise customers need. We sometimes need ridiculous things. When [insert enterprise server vendor here] has a bad group of DIMMs from [insert memory manufacturer here], they don't make me send them the DIMMS one-by-one as they go bad when 6 have gone bad in one box already and more are continuing to go bad and they don't make me sit around waiting for shipping, diagnostics, processing, etc. Instead, they say "yeah, sounds like a bad batch. We're REALLY sorry those aren't working properly, and we've got a replacement set of DIMMS for that entire order being overnighted right now with a return label enclosed for all the DIMMs in the bad group."

Add up the time I'd spend dealing with Newegg, shipping, going back and forth with them for RMAs of individual DIMMs, customer downtime/slowdowns (as capacity dwindles as boxes rotate out of the cluster for repeated DIMM replacements), and engineer time testing everything over and over again to try and weed out everything that's actually going bad, then put that up against the initial savings I'd get for getting the RAM/HDDs/etc from Newegg vs the enterprise vendor. My time costs the company quite a bit of money, as do the opportunity costs which arise when my time is eaten by trivial matters like RMAs. It may not be worthwhile for YOU to buy a $250 for $1000 from an enterprise level vendor, but I can ASSURE you that it's plenty worth it in the long run for a great many businesses.

Re:Contrast with consumer hard drive prices (1)

drsmithy (35869) | more than 2 years ago | (#38626244)

They make almost nothing on drive sales, they make huge margins on the software

A year or two ago I used to work for a company that used NetApp storage. NetApp would charge us a bit over US$1000 for a 1TB SATA drive. The retail price of a 1TB "Nearline SAS" (essentially identical to NetApp's drive) was about $250 (which already had a pretty sweet profit margin built into it, I'm sure, since a "normal" 1TB SATA drive was under $100 at the time).

(Of course, NetApp was still noticably cheaper than EMC.)

The "intent" may not have been to sell drives, but they unquestionably make an enormous amount of profit doing so.

Re:Contrast with consumer hard drive prices (1)

Bravoc (771258) | more than 2 years ago | (#38626270)

Oh yea, don't get me wrong - they made money on the HDs. The thing is, they make WAY more on the software. When it comes down to it though, their money is in the software.

I probably shouldn't have opened my mouth anyway, I got sick of defending their hard drive prices when I worked there, been gone over a year - don't want to revisit that BS.

Re:Contrast with consumer hard drive prices (1)

RicktheBrick (588466) | more than 2 years ago | (#38621532)

In the early 80's I was working for a well known computer manufacturer. The rule of thumb than was a hard drive cost a thousand dollars per million bytes. At that cost a 3 terabyte hard drive would cost 3 billion dollars. Until the public can store movies legally on hard drives without any problems these hard drives will not come close to being filled up. Only by giving people a reason to have get hard drives in the terabytes will we increase the demand and thus increase and diversify the places where they are manufactured.

Re:Contrast with consumer hard drive prices (1)

tlhIngan (30335) | more than 2 years ago | (#38638032)

Until the public can store movies legally on hard drives without any problems these hard drives will not come close to being filled up. Only by giving people a reason to have get hard drives in the terabytes will we increase the demand and thus increase and diversify the places where they are manufactured.

But the public CAN do this. There are, in the US, many legitimate places to buy movies online and store them locally.

First, there's "Digital Copy" included with many Blu-Ray discs, for free.

Next we have iTunes, Amazon and other services selling movies that download to your hard disk. And there are often other strange services - I know sometimes buying PNY memory cards they throw in a "free movie" offer, as well.

Sure it's DRM'd to hell and back, but it's a legal source to obtain your movies.

Unless you meant "downloading for free DVD rips and such"...

Re:Contrast with consumer hard drive prices (1)

imunfair (877689) | more than 2 years ago | (#38623836)

I was looking at WD1002FAEX 1TB drives on Amazon last night and they were $150, this morning i looked again and they were $100. I'm not sure what caused the massive discount - but now would be a good time to grab some if you actually need the storage. It's a reasonable price - they were selling for $90 a year ago.

There's a huge price disparity on these drives from different places - Newegg ($240), TigerDirect ($295), Buy.com still has them at $150 like Amazon did, and now Amazon is at $100. Seems silly that one product could be sold for that huge variation.

Re:Contrast with consumer hard drive prices (1)

imunfair (877689) | more than 2 years ago | (#38624804)

Scratch that, they're back up to $145 on Amazon now. Either a flash sale or a glitch in the matrix. Still, $145 to $295 is a huge range for an identical product.

Re:Contrast with consumer hard drive prices (1)

ChumpusRex2003 (726306) | more than 2 years ago | (#38620678)

If you regularly buy from the major storage vendors, you'd know that they already mark up hard drive prices by up to 400%. I think this just indicates that the raw cost of hard drives has got so high, that even with their generous padding, they are feeling the pinch.

Re:Contrast with consumer hard drive prices (1)

PixetaledPikachu (1007305) | more than 2 years ago | (#38620782)

, but they come out looking like good guys if they only hiked their prices 5 to 15 percent.

Well a single 300GB replacement disk from IBM could cost you USD 1000 to 1200. If they jack up the price to 400%, their warranty extension program might be a cheaper solution than paying on per-case basis

Re:Contrast with consumer hard drive prices (1)

thegarbz (1787294) | more than 2 years ago | (#38621148)

It was cheaper to buy a NAS box and rip the harddisk out and throw away the electronics than it was to buy a harddisk. I bought 1.5TB a NAS from Medion for $180 during the height of the flood hike. At the time the same1.5TB Seagate harddisk was selling for $200 at the local computer store.

It's strange how the the companies are only now raising their prices at a time where most of the consumer prices are slowly starting to return to normal.

Re:Contrast with consumer hard drive prices (1)

Junta (36770) | more than 2 years ago | (#38621168)

1) Already marked up by a large margin.

2) One of the various things that extra money goes toward in the enterprise vendor game is having *gobs* of extra inventory so that they can carry out 'business as usual' in the event of a supplier encountering a situation like this. If you call for warranty replace on a part you got cheap, direct from manufacturer, first the cheapo vendor tends to resist more and second when they do relent, in the cheapo case you may have to wait for it to ship internationally, whereas with many enterprise vendors they likely have a replacement part within 50 miles of your location, even for your obscure, 2 year old system.

seriously (1)

strack (1051390) | more than 2 years ago | (#38620774)

would it really be that hard to build a key hard drive component manufacturing facility on, oh, you know, not a floodplain?

Re:seriously (1)

Anonymous Coward | more than 2 years ago | (#38620888)

Well hop to it then, know-it-all.

Individual drive cost (0)

Anonymous Coward | more than 2 years ago | (#38620784)

What cost me $70 now runs $180 on Newegg. There's no way in hell I'm buying anything until the prices become MUCH more reasonable. I'm not asking for a drop to the original price right away, but goddamn. Make the prices a bit more sane and I *might* be tempted to spend a little tax money on a drive or two. At least I have a spare 1.5tb sitting around for emergencies.

Re:Individual drive cost (2)

alphatel (1450715) | more than 2 years ago | (#38620844)

I had thought about buying a case of 2TB drives just before the flood because they were so damn cheap. Would have made a nice profit. Honestly they aren't so expensive at the moment, but certainly much more than I would like to pay.

Re:Individual drive cost (1)

ColdWetDog (752185) | more than 2 years ago | (#38621876)

I actually did that, dumb luck more than anything. NewEgg was running a sale and one of my projects was going to be to cycle through the drives on my MacPro.

Saved about $700 on the whole deal, even if one of the drives was DOA. At least Seagate was kind enough to send me a refurb for free - the 30 day window for NewEgg to replace the drive having expired.

An excuse for the future. (2)

noobermin (1950642) | more than 2 years ago | (#38620850)

I have a suspicion that like the airlines baggage fees, they'll keep prices this high even after the issues are resolved since consumers will be used to them at that point.
Not to downplay the real loss of life and property, but the supplier might use this as an opportunity for the future.

Re:An excuse for the future. (1)

QuantumRiff (120817) | more than 2 years ago | (#38623948)

Thats a good thing.. We have some systems that don't need capacity, just something to boot from before mounting remote data, We have been buying 128GB SSD's.. If more people are doing that, then it helps drive the cost of SSD's down, and gets those companies more money for R&D

Re:An excuse for the future. (0)

Anonymous Coward | more than 2 years ago | (#38626048)

exactly i am sad because HDD prices are insane and i can not afford 20TB array for "just to have it" but on the other hand i am glad this will make SSD's better choice for more people and end up decreasing price when mass market kicks-in

HD prices are falling on Newegg (1)

Anonymous Coward | more than 2 years ago | (#38620858)

They started having HDs on sale recently, even a new 2TB for $139.99 the other day. All prices are gradually drifting downwards.

suicide (-1)

Anonymous Coward | more than 2 years ago | (#38620892)

I'm done with any regime based on the idea that I must exploit my fellow man rather than work with him. And through my thirty years all I've seen is the world going further in that direction. Bye all.

-------

Re:suicide (1)

couchslug (175151) | more than 2 years ago | (#38621222)

Hurry the fuck up and stream pics too.

No one has mentioned that.. (1)

teknx (2547472) | more than 2 years ago | (#38621004)

All the companies mentioned in this article with the exception of Lenovo, are all U.S. companies. Does building factories in the U.S. seem so laughable nowadays that such an idea is not even entertained? I did some research and it seems that the average wage for skilled labor is about $163/month in Thailand. How bad would the U.S. economy have to get before those kind of wages become acceptable here?

Re:No one has mentioned that.. (1)

loufoque (1400831) | more than 2 years ago | (#38621210)

Minimum wage in the US is about $1,150. Skilled people are paid at least 50% more of that, so at least $1,725.

It's not possible for US salary to go down this much in our lifetime.

Re:No one has mentioned that.. (1)

GaryOlson (737642) | more than 2 years ago | (#38621310)

It's not a matter of what wage levels are acceptable in the US; but rather what type of wages support the onerous and complex tax system implemented in the US. Even using a simple comparison [wikipedia.org] of taxation, you can see the US tax rates and structure are so complex and expensive that the US cannot support simple labor jobs. I personally know individuals in the US who cannot keep employment at basic jobs because the complexity of our taxation and economic implementation overwhelms them. And legalized financial con artists take advantage of these people for personal profit.

It's not the wage levels; it's the tax levels. Same as it was in 1776.

Re:No one has mentioned that.. (1)

drinkypoo (153816) | more than 2 years ago | (#38621958)

The only way for American manufacturing to compete on a cost basis with slave labor is to automate humans out of the equation, except for the people who program and repair the robots of course. Or, of course, to place a tariff on goods which come from countries with weak labor laws or enforcement of same to level the playing field. And frankly, I don't want the manufacturing jobs to come back without a stronger EPA, and the same kinds of tariffs placed on goods coming from countries without strong environmental protection. I don't want to keep crapping up the world, that's not where I'm going with this, but I certainly also don't want to bring a bunch of dirty manufacturing back to the land on which I live.

Re:No one has mentioned that.. (1)

Loki_1929 (550940) | more than 2 years ago | (#38627426)

$2000/yr?

Well, that's a bit more than one month's rent of a 1 bedroom apartment in SF, NYC, or DC. Not sure what you'd do for housing for the other 11 months, nor what you'd do for food, clothing, transportation, or just about anything else. I spend $2000/yr in gasoline. There was a time where I spent $2000/yr at Starbucks (a habit I've since kicked to the curb). That $163/month would pay for about 3/4 of a trip to the grocery store for two weeks worth of food.

To give you a middle-of-the-road idea of how things are currently in the US, $30,000 gross annual salary is enough for one (maybe two if you stretch it) people to live in an ok apartment (nothing fancy, not a house unless you're in the middle of nowhere), feed yourself somewhat decent food (probably Safeway specials, certainly not fresh, locally grown, organic stuff), get yourself back and forth to work everyday in an ok (likely used, but running-alright car), and put ok (nothing fancy or name-brand) clothes on your back. At $50,000/yr, you can have a decent apartment or small house in an ok to decent area, feed yourself slightly healthier stuff, have a slightly newer and more reliable vehicle for transportation, and probably have a kid enjoy those things as well.

Now, some people survive (I wouldn't call it "living") on less than that. Assuming you have a wife and kid and you're making $15,000/yr, you're living in a slum or government-subsidized dump in the middle of gangland, living off the McDonald's dollar menu for your 1-2 meals a day (though your kid might actually get 3 meals a day when their drug infested hellhole of an inner city public "school" (gang recruitment complex) is in session), likely walking or taking the bus (when you can afford it and if a bus route exists where you are) to most places, and pretty much are in a miserable pile of shit every single day of your life. You and your family manage to survive at this level of income only by the grace of a steady flow of local, state, and Federal tax dollars providing support for some/most of your extremely basic shelter and food needs and your child likely never receives the tools to break out of this cycle of poverty.

So how bad would things have to be for US citizens to live off $163/month? I invite you to explore that question while watching the classic Mel Gibson film "Mad Max". http://www.imdb.com/title/tt0079501/ [imdb.com]

I think you'll find an accurate representation of the kind of society you would witness if average folks in the US were ever forced to exist at that income level.

They're already marking up drives prices by 10-20x (1)

Ritz_Just_Ritz (883997) | more than 2 years ago | (#38621008)

Seriously, have you seen what EMC and Netapp charge for drives? They could afford a temporary price in drives without passing anything along to their customers and still make a tidy profit. Pardon me if I don't shed a tear for this temporary uptick in their materials cost.

In their defense... (1)

Junta (36770) | more than 2 years ago | (#38621200)

The reason they avoided a cost uptick so long is because they spend a lot of money to stockpile replacement parts that *usually* will never be sold or shipped and thus had a huge stockpile. You are paying for that continuity being guaranteed throughout your usually lengthy warranty.

If you don't *need* that continuity then don't buy their components. Functionality wise you can get by without those vendors by using much cheaper alternatives and it may very well be more appropriate in your case (if you have enough skills, attention, and infrastructure to mitigate the risk in other ways, or the risk just isn't significant in your application). Some endeavors are exceptionally paranoid and once in a blue moon an innocuous difference in a new model somehow significantly breaks the system it is a part of (of the few times I can think of, usually poor in-house software hardcoded to awkward specific cases is to blame here). In any event I'd never buy from one of the enterprise vendors for my house, but for some things at work I do think an enterprise vendor is important even with their insane markup.

Forced to buy a SSD (1)

loufoque (1400831) | more than 2 years ago | (#38621174)

I purchased a Lenovo W520 a couple of weeks ago, and there simply was no 7200rpm choice, it was 5400rpm or SSD. (and the 5400rpm was the same price as what the 7200 one would have been).
So I had to purcharse a SSD instead, which was significantly more expensive.

It's all a ploy to get us to spend more money.

Re:Forced to buy a SSD (0)

Anonymous Coward | more than 2 years ago | (#38621296)

Poor you! Bought a workstation laptop and was "forced" into a SSD.

'Cause you couldn't postpone your purchase until 7200rpm hard drives were back in stock.

Re:Forced to buy a SSD (1)

sethstorm (512897) | more than 2 years ago | (#38623112)

Couldn't find one of these [seagate.com] (750GB, 7200RPM) for anything reasonable?
I just decided to clone and expand the original disk onto the new drive - then saving the original as a restore disk.

Not sure how far back I got mine, but it was before everyone went OMGWTFFLOOD and left the territory of sane pricing.

Re:Forced to buy a SSD (1)

zippthorne (748122) | more than 2 years ago | (#38624506)

Why would you want a noisy, hot 7200 rpm drive in a laptop?? The seek time improvement over the 5400rpm is modest and linear, but the energy use is quadratic. For something that runs off a battery, this doesn't really sound like the wisest of design choices.

Re:Forced to buy a SSD (1)

loufoque (1400831) | more than 2 years ago | (#38624534)

The W520 is a laptop geared towards high-performance.

Re:Forced to buy a SSD (1)

mysidia (191772) | more than 2 years ago | (#38627996)

The seek time improvement over the 5400rpm is modest and linear

That didn't make any sense. 5400RPM and 7200RPM drives have identical seek time. Seek time is governed by form factor, areal density, is proportional to the length of the access arm, and is independent of rotation speed (the longer the access arm, the greater the seek time).
Random access time to read or write a sector is related to the sum of seek time and rotational delay.

The rotational delay of a 7200RPM drive is 16ms.

For a 5400RPM drive it is 22ms.

In both cases, the seek time is approximately 4ms.

Or: a 7200RPM drive can perform approximately 50 random IOPS per second, and a 5400RPM drive can only perform 38.

Meaning that the 7200RPM drive is 25% faster. Meaning it will perform the required work and get to an idle state 25% faster.

Random I/O is critical for many important user activities, and effects the user's perception of the performance of the entire machine -- loading programs and booting are in particular dependant on random IO performance.

If the computer performs its tasks faster, that means user gets the work done faster, and get the computer idle and back to sleep faster.

The power consumption of the 2.5" laptop hard drive is miniscule, whether 7200RPM or 5400RPM is normally 400 mA or less, and much less when the drive spins down for power saving.

Once you consider the power draw required for monitor, CPU, and motherboard -- it's not worth it in most cases to utilize a slower hard drive, if random I/O critical activities such as booting take much longer; the power saving from switching from a 7200RPM to a 5400RPM drive is not enough to cover the increased power consumption (from other components) that results from utilizing a slower hard drive.

Re:Forced to buy a SSD (1)

zippthorne (748122) | more than 2 years ago | (#38698200)

Hmm. For some reason I always thought that rotational delay was folded into the seek time numbers. Probably because I never actually bothered to do the calculation. Although my math puts the period of both drives at 11ms and 8.3 ms, which is pretty close to the seek time numbers on most drives (and would have an expectation value of 5.5 ms and 4.2 ms....). I would expect, for instance, a drive with a max head travel time of 8ms and a max rotational delay of 8ms to have an average total of 8ms, with a gaussian distribution.

Still, I think you're bolstering my main point, which is that if you're looking for performance, you go with the SSD, and if you're looking for battery live, you go with the 5400, which should "perform" quite a bit better than the 7200rpm drive if it spends most of it's time idle - assuming low friction, the 5400 rpm drive takes just over half the energy to spin up as the 7200 rpm drive.

Since 7200 rpm drives are more expensive than 5400 rpm drives, there shouldn't really be much of a market for this "middle" ground.

EMC? now that is funny (1)

andre1s (1688402) | more than 2 years ago | (#38624524)

they sell rebranded 1TB drives for 1K USD seams they could afford to absorb $20

Re:EMC? now that is funny (1)

RITjobbie (211397) | more than 2 years ago | (#38626030)

Yes, they are selling you a Seagate Constellation 1TB drive for waaaay more than what you would pay on NewEgg. But they burn in their drives before shipping them to you. This saves them money in CRUs and saves you time in drive replacements. More than anything, you are paying for their support.

From someone who recently experienced a pretty nasty multiple-drive failure in an EMC array, holy shit their support is amazing. I will continue to spend my (employer's) money on EMC gear based solely on how they handled my recent "situation".

(I had multiple drives in the same AX4 enclosure report multiple soft errors simultaneously. SOP is to replace failed drives, but they insisted on proactively replacing the rest of the drives in that enclosure. And the AX4 is one of their crapola products. If something like this happened on our VNX, I would have a team of CEs in my office sweating all over my desk.)

Re:EMC? now that is funny (1)

mysidia (191772) | more than 2 years ago | (#38630046)

Yes, they are selling you a Seagate Constellation 1TB drive for waaaay more than what you would pay on NewEgg. But they burn in their drives before shipping them to you.

Maybe they do burn them in. But it doesn't really cost $1200 to burn-in an $80 SATA drive.

What it is, is that they have "hidden" a portion of the storage array cost in the price of individual disk drives. Similar to the way that Oracle and other products hide part of their application cost in the price of adding additional CPUs to your server (you have to pay more, for the software license key to activate usage of more CPUs).

This way they can sell an array at lower price, and claim "competitive" price per TB (after 80% discount). But then, once you've bought the array, you get to pay a much higher price, thus making up the discount for your initial purpose...

Think of it this way... after a 80% discount, the drives are only about 300$, which is kind of a "fair" markup for a pre-tested burned in drive of trustworthy provenance specified by the subsystem manufacturer down to the hardware/chip revision and firmware levels.... yeah, it's true EMC/NetApp don't provide you just "any" hard drive; they provide you a hard drive proven to work with their array, and reasonably shown to work properly, be stable, do what it's supposed to, etc, etc.

That's worth paying 400% of the price, perhaps. But $1200 for a physical unit that costs $80... is a bit outlandish. And obviously a result of hiding other costs in the consumables for revenue. The whole give away the razors, sell the blades at exorbitant prices, strategy.

Gouging. (0)

Anonymous Coward | more than 2 years ago | (#38624944)

At this point I believe it's outright gouging.

Fine, they can keep raising the prices, a lot of my customers end up buying a new computer now instead of repairing, sucks for me (but I personally make more money through other types of repairs than disk failures) and when I upgrade my system, I will reuse my old terabyte drives that have been sitting around and some older 250s with backup, with and SSD as the main drive.

All they're doing is making SSDs look more attractive. I mean, I can get a 120 GB SSD for almost the same price as a 160 GB HDD now (when they're on sale, and I suspect there will be more "Sales" of SSDs in the near future, until their real price reflects the sale prices, just like hard drives did.

You do have to wonder, Thailand does have some higher places that would have been a better choice to build a factory, why did they choose areas that are prone to flooding for 25% of their production?

One part of me would like to attribute greed and stupidity (hey we can cut costs if we build here!)

but for a company that is well aware of the sensitivity of building these things, and building electronics in general, and likely had a site survey AND discussed the risks of building there, (No, I do not refer to the HDD makers, the companies affected are the companies that make the motors) they likely considered the fact the factory sits in a flood plain as a bonus, because now they can profit heavily. Not only will they make so much profit that they could rebuild more plants, but they will make more than they previously did thanks to a natural disaster.

I'm inclined to think this was intentional.

Re:Gouging. (1)

Hognoxious (631665) | more than 2 years ago | (#38628206)

At this point I believe it's outright gouging.

I believe you're talking out of your ass.

Fine, they can keep raising the prices, a lot of my customers end up buying a new computer now instead of repairing

That doesn't make any sense. A new computer will usually contain a HD, and the cost of that HD is factored into the price the manufacturer charges.

You do have to wonder, Thailand does have some higher places that would have been a better choice to build a factory, why did they choose areas that are prone to flooding for 25% of their production?

They didn't. While the area does suffer from heavy seasonal rainfall, normally the defenses are able to cope. This time they didn't.

I'm inclined to think this was intentional.

So they went to the trouble and expense of building a factory with the intention of destroying it, so the reduced supply would drive up prices? Two problems with that - one, they could have had the same effect for less outlay by simply not building the factory at all, and two, if the market would bear higher prices they would have been charging them all along.

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