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Higher Hard Drive Prices Are the New Normal

Soulskill posted more than 2 years ago | from the sorry-about-your-luck dept.

Data Storage 268

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

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Really? (5, Insightful)

angryfirelord (1082111) | more than 2 years ago | (#40110265)

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

Re:Really? (-1)

Anonymous Coward | more than 2 years ago | (#40110351)

This meme needs to die.

Re:Really? (5, Insightful)

ZeroSumHappiness (1710320) | more than 2 years ago | (#40110397)

Preferably by ending behavior that causes sarcastic shock.

Re:Really? (0)

Anonymous Coward | more than 2 years ago | (#40111035)

Going back in time and changing the script.

Re:Really? (5, Interesting)

ShanghaiBill (739463) | more than 2 years ago | (#40110381)

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

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

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

Re:Really? (1)

C_amiga_fan (1960858) | more than 2 years ago | (#40110551)

Well if they really WERE colluding, then the U.S. DOJ or the E.U. equivalent would open an investigation, as the DOJ did against the record companies in 2000. (And later forced them to refund $25 for every CD purchaser who requested one.) Collusion == forming a cartel == illegal.

Re:Really? (5, Insightful)

alexander_686 (957440) | more than 2 years ago | (#40111189)

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

Re:Really? (2)

Yvanhoe (564877) | more than 2 years ago | (#40111199)

I also have this theory that they really want to push for SSDs and are not interested in improving the prices on regular HDDs. I observed that 1 TB laptops are hard to find if the same shop sells high-end SSD-equiped laptops too. It may be anecdotal, I have observed that in 3 shops. Has anyone made the same observation ?

Re:Really? (3, Insightful)

alen (225700) | more than 2 years ago | (#40110407)

your annual profit is $483 million. it's going to cost you about that much to build a new plant so you can sell your product cheaper and get your profit down to $200 million

these decisions aren't rocket science. i bet your're not running a business

Re:Really? (1)

poetmatt (793785) | more than 2 years ago | (#40110739)

And? That doesn't mean they're legal, it just means our antitrust people are busy dealing with bigger fish to fry. In the meantime, we all lose by paying ridiculous prices. It's no different than any other big business collusion - the company gains, the customer loses.

Re:Really? (2)

alen (225700) | more than 2 years ago | (#40110927)

how is it illegal? there is no democratic government that can force you to invest in something that won't return any profits

Re:Really? (5, Insightful)

CannonballHead (842625) | more than 2 years ago | (#40111047)

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

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

Since when are profit margins required to be low?

Re:Really? (2)

gl4ss (559668) | more than 2 years ago | (#40111163)

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

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

Since when are profit margins required to be low?

it's illegal if they've as much as nodded in each others direction to keep to current pricing level.

the simple reason why the prices are high is that during the hd manufacturing troubles they realised that people will buy the same amount of hdd's even if the cost stays the same.

(anyhow.. I think 2.5" pricing has gone down).

Re:Really? (2, Funny)

Anonymous Coward | more than 2 years ago | (#40110453)

But ... but ... Free Market(tm)!!1

Its a cartel (1, Informative)

Anonymous Coward | more than 2 years ago | (#40110269)

Its the WD-Seagate cartel thats keeping prices up artifically and buying up any competitors

Re:Its a cartel (1)

Vicarius (1093097) | more than 2 years ago | (#40110349)

Having less competitors means that price war will not be as strong as before. No wonder that after all of the acquisitions in the last couple of years, prices are not dropping as fast as previously.

Re:Its a cartel (1, Flamebait)

fnj (64210) | more than 2 years ago | (#40110595)

Not only is the competition pre-empted by two megacorps buying all the other outfits, it's a race to the bottom in quality too. By far the best quality drives were Samsung - just look at the ratings on Newegg. - followed by Hitachi Global Storage.

Now Samsung is Seagate; the drives are starting to come throught with ST model numbers. And Hitachi is WD. The quality of both Seagate and WD has been pure shit for a long time. No one is going to be able to get a drive better than garbage quality anywhere any more.

(not addressing you directly Vicarius) OK, you capitalism fan bois, worshipful eyes blazing with faith, how come your favorite shitty system brings us to this sorry state?

Re:Its a cartel (2)

ZeroSumHappiness (1710320) | more than 2 years ago | (#40110691)

To be fair, quality should go /up/ with the acquisitions so long as you buy drives that were made at the formerly Samsung/Hitachi plants. They didn't buy out those companies then raze all their manufacturing resources and there's no immediate reason to refit the plants and thus reduce reliability. Now, if five years down the line they're not maintaining the plants and they let tolerances slip that'd be a problem.

Granted, I am unsure how the floods affected individual plants, so if it's primarily the high quality plants that were scrapped and they are not rebuilt or rebuilt to a lower standard that would be a problem.

Re:Its a cartel (2)

fnj (64210) | more than 2 years ago | (#40110943)

Yeah, I recently bought four more so-called "Samsung" 2TB (I already have eight REAL Samsung 2TBs) quick, hoping to get some before the invevitable slide in quality got too bad. And it's GOING to happen. Seagate's corporate policies are going to gut QC and make manufacturing and redesign shortcuts. It's only a matter of time; probably not very much time. When my drives arrived, they had ST part numbers next to the old "HD204UI" designation - and they say "Made in China". I'm crossing my fingers. So far, so good. But I have no idea what I'll do in the future.

An optimist would say that at least some of Samsung's superior design and QC derived reliability will hopefully rub off on the new Seagate. I'm not an optimist. I'm afraid I think your five-year estimate is optimistic. In point of fact, I don't know of any assurance or even indication that they are using the same final assembly plants that Samsung did. For all we know, they are buying the same components (until they can swap in shittier components), and then slapping them together in some inferior jobbed-out Chinese plant.

Re:Its a cartel (1)

colinnwn (677715) | more than 2 years ago | (#40111055)

Interesting that Samsung has such well regarded hard drives. The only Samsung item i've ever been impressed with was my first flat panel monitor from them 11 years ago. Since then, everything else Samsung I've bought has died before its time shortly after the warranty expired, or had functionality problems Samsung knew about and refused to provide firmware fixes or offer merchandise credits or rebates.

New solid state storage (5, Interesting)

macemoneta (154740) | more than 2 years ago | (#40110285)

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

Re:New solid state storage (5, Insightful)

SJHillman (1966756) | more than 2 years ago | (#40110331)

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

Re:New solid state storage (4, Interesting)

0123456 (636235) | more than 2 years ago | (#40110425)

Given that hard drive technology is still having breakthroughs, it will be some time before SSDs can catch up in overall capacity, nevermind price per GB/TB.

Given the rapid decline in the number of write cycles at smaller process sizes, that may never happen with current flash technology.

Re:New solid state storage (0)

Anonymous Coward | more than 2 years ago | (#40110529)

This is a "transistors are crappy now vs vacuum tubes working great" argument.
Transistors were smaller and consumed less energy, so they got perfected and won.

Re:New solid state storage (3, Informative)

0123456 (636235) | more than 2 years ago | (#40110571)

This is a "transistors are crappy now vs vacuum tubes working great" argument.

No, it's a 'flash is running into fundamental laws of physics' argument.

I suspect another SSD technology will come along to replace it, but flash probably can't go much further unless you add a large oversupply of cells to replace those which die.

Re:New solid state storage (1)

kiehlster (844523) | more than 2 years ago | (#40110709)

Latest word says vacuum tubes strike back. I guess you missed this article [slashdot.org] the other day. Maybe they will invent mem-vacuums for HDD to compete with memristors.

Re:New solid state storage (1)

Anonymous Coward | more than 2 years ago | (#40110603)

laptops don't value speed over capacity, that's silly. They don't value speed over anything. It's on the very bottom of their list.

They value ENERGY EFFICIENCY over everything. If you come out with a SSD technology that uses 20% less energy, but runs at 1/4th the capacity of our current SSDs, it will find itself in almost every laptop.

Re:New solid state storage (1)

0123456 (636235) | more than 2 years ago | (#40110713)

They value ENERGY EFFICIENCY over everything. If you come out with a SSD technology that uses 20% less energy, but runs at 1/4th the capacity of our current SSDs, it will find itself in almost every laptop.

My laptop consumes around 20W for normal desktop use. The HDD is rated at something like 1.5W. Cutting 20% off that 1.5W will have a negligible impact on battery life.

Meanwhile the 750GB drive can't hold all my Steam games so I'm going to have to stick a 1TB in there soon.

Oh, and we put an SSD into the netbook because we regularly boot it up, do some stuff and shut it down again so knocking 60-70% off the boot time was a good investment.

Re:New solid state storage (1)

FranTaylor (164577) | more than 2 years ago | (#40110735)

"They value ENERGY EFFICIENCY over everything."

Is that why most laptops have fans to conduct away the heat energy that they are wasting?

Re:New solid state storage (0)

Anonymous Coward | more than 2 years ago | (#40110815)

Maybe in three years. 128GB feels like about the minimum people will tolerate in a laptop that's used for things other than just web surfing. And 128GB SSDs are only now at a competitive price point. If you said you'd have to deal with a 32GB hard drive or pay 4x the price, people would pass. 20% less energy is great, but that's just a 20% improvement in a single component, not the system.

Re:New solid state storage (2)

Khyber (864651) | more than 2 years ago | (#40110667)

"Rotational media will be around for a long time to come, barring any real shattering breakthroughs in solid state media."

You mean like the currently-planned 1TB SDXC card format? Take that stuff, make a 2.5" drive, you could dump 16TB into a tiny piece of plastic, epoxy, and silicon.

Rotational media is only going to stick around because it's CHEAP.

Re:New solid state storage (1)

0123456 (636235) | more than 2 years ago | (#40110761)

Rotational media is only going to stick around because it's CHEAP.

Well, duh.

Re:New solid state storage (1)

FranTaylor (164577) | more than 2 years ago | (#40110819)

"Rotational media is only going to stick around because it's CHEAP."

Is there any other reason for technology to stick around when it competes with other technology?

Re:New solid state storage (1)

SJHillman (1966756) | more than 2 years ago | (#40110979)

Yeah... and they also recently announced hard drives that could be as big as 60PB (yes, PB, not TB) within 4 years. A bit more of a jump over current hard drives than your mentioned SDXC is over current solid state capacity.

Re:New solid state storage (3, Informative)

iamhassi (659463) | more than 2 years ago | (#40110975)

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

SSDs have already surpassed hard drives in capacity, with 16TB being offered on a single SSD. [guru3d.com] SSDs are less than $1 a gigabyte. [newegg.com] True, much more than hard drives, but 11 years ago when hard drives were $3 a gigabyte [xlr8yourmac.com] and 7 years ago hard drives were 50 cents/gb. [silentpcreview.com] Now hard drives are less than 1 cent a gigabyte, so how long do you think it will take SSDs to get there?

SSDs have the huge advantage that everyone wants them. Every device needs fast access and transfer rates with low power usage in as small a space as possible. More devices means more sales means lower prices as they ramp up production. I have a feeling that by the end of 2012 people won't even be considering a hard drive in a PC anymore, everyone will just buy SSDs.

Hard drives will never win the capacity war, not when they can currently put 64 gigabytes on a space smaller than your fingernail [newegg.com] and that includes the memory controller and case.

Re:New solid state storage (1)

na1led (1030470) | more than 2 years ago | (#40111105)

Rotational media will always return more revenue because of their limited life cycle. These companies see no benefit in selling SSD's cheap when they may outlast standard hardrives by 10 fold. Most consumer goods are designed to last only so long.

Re:New solid state storage (4, Insightful)

ShanghaiBill (739463) | more than 2 years ago | (#40110409)

Most articles I've seen indicate that rotational storage ... will be replaced within 2 years ...

Most articles I read during the 1980s said the same thing.

Re:New solid state storage (0, Insightful)

Anonymous Coward | more than 2 years ago | (#40110465)

Really, "most articles" in the 80's? Hyperbole or bullshit; you decide!

Re:New solid state storage (0)

Anonymous Coward | more than 2 years ago | (#40110585)

He said, "...articles [he] read...," which could be an arbitrarily small subset.

Re:New solid state storage (1)

0123456 (636235) | more than 2 years ago | (#40110661)

Really, "most articles" in the 80's? Hyperbole or bullshit; you decide!

I'm pretty sure every mass-market article I read mentioning bubble memory in the 80s said that it was going to replace rotational storage in a few years.

Whatever happened to bubble memory anyway?

Re:New solid state storage (0)

Anonymous Coward | more than 2 years ago | (#40110681)

There was a "Bubble Memory is the future" hype train, but it was very brief.

http://www.dvorak.org/blog/whatever-happened-to-bubble-memory/ [dvorak.org]

Ya well there's some new evidence (5, Informative)

Sycraft-fu (314770) | more than 2 years ago | (#40110793)

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

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

Re:Ya well there's some new evidence (1)

Hatta (162192) | more than 2 years ago | (#40111175)

Few people actually need 2TB of storage

The unfortunate side effect is that we're going to lose the economies of scale involved in producing these drives. Expect the home file server to disappear into the cloud.

Re:New solid state storage (2)

alen (225700) | more than 2 years ago | (#40110463)

its already happening, people are buying smartphones and ipads. even my wife's macbook rarely gets used. she's always on her iphone.

the computer is mostly a paperweight at home that i turn on once a month to copy photos from my iphone

Re:New solid state storage (2)

amoeba1911 (978485) | more than 2 years ago | (#40110937)

This doesn't say anything at all - just because you and your wife don't use computers doesn't mean that the rest of the world will stop using computers. As adorable as the ipad is, it is a computer replacement only for people who don't use computers. It's great for media consumption, but an ipad is not a computer.

I have an ipad. I am not much of a media consumer: I don't like watching movies on a tablet, I don't subscribe to magazines, I don't read digital books and I'm not too big on facebook/twitter scene and portable gaming isn't my thing... so for me the ipad is just a big paperweight. But I can imagine for media consumers it is better than sliced bread - all the things they needed a computer for many years ago they can now do it on the ipad, good for them. That doesn't mean ipad is a computer replacement - it's only a computer replacement for people who didn't use computers in the first place.

Re:New solid state storage (1)

kidgenius (704962) | more than 2 years ago | (#40110491)

SSD will probably completely replace regular drives at the consumer level in about 5 years. Though external backup systems for the consumer market will probably still use regular drives for 5-8 years. Memristors, mram, etc have been touted as the Next Big Thing for years now and nothing has come up yet.

Re:New solid state storage (2)

MLCT (1148749) | more than 2 years ago | (#40110513)

With rotational manufactures proving technology up to 60 TB on a disk (seagate I think), I don't see SSDs touching them for a long time.

We wan't more storage - and the more storage we get the more we want. SSDs just can't get on the right growth curve - the price/size ratio for SSDs just doesn't scale. Look at the class of "mobile" devices (phones, tablets etc.) - they are topping out for onboard starage at numbers that are pretty poor in a modern context - and the sizes aren't growing. You don't see apple saying with the release of a new ipad, "we are doubling everything: to 32, 64, 128 GB - for no extra cost" - because they can't, the prices haven't come down very much for those sort of sizes over the timespan of a number of years.

New technology may change things, but I can't see it happening any time soon - new tech introduced takes quite a while to get the economies of scale it needs to beat the incumbent technology.

Re:New solid state storage (2)

Dr_Barnowl (709838) | more than 2 years ago | (#40110953)

We want more storage

Speak for yourself ; for my work, which has some fairly heavy data sets, I muddle through on a 64GB SSD. I'm tempted to upgrade to a 128GB model, because it's sometimes a bit tight and I'd like to have room for my music collection (12GB).

Games ; I currently have a 1TB partition devoted to game installs. It's not remotely full yet.

Video : this is the biggie. My HTPC currently has 1TB of storage as well. Paradoxically, I think it would probably be better if it had less storage - we just tend to accumulate a huge load of old crap that we're never going to watch. It might be nice to rip all my DVDs for instant access, but that's a pretty tedious task.

Backup : I don't back up my video, because it's not that critical to me (all being broadcast video, it came free, so I don't value it much). Because my work drives are small, I don't need much backup. My current 2TB external drive has more than half it's space free, and I'm not selective about what I back up, and have a 3 month retention time.

I have about 2.5TB of storage lying around on my desk not even wired to anything. Most of it is a single 1.5TB drive.

Now ; my backup strategy is not sufficiently paranoid. While most of my work is stored elsewhere in VCS repositories anyway, I could conceivably be inconvenienced by a failure. So I can see a need for a second backup device, which would need to be 500GB of storage. I currently have 5 times this lying around on my desk, so my problem isn't storage, it's apathy.

The people who do need all this storage, I'm sad to say, are probably torrenting a lot, because that's the only way a consumer accumulates that much data that they don't have a read-only media copy of already.

Re:New solid state storage (1)

ceoyoyo (59147) | more than 2 years ago | (#40111217)

Seagate was saying (that is, it's vapour) they might have 60 TB disks by 2016. Not now.

At the moment I have a 256 GB SSD in my notebook, along side a 512 GB hard drive. Guess which one is being used at the moment? With more people streaming things, the average person's need for storage is probably not going to grow at anything like it used to. Once that happens, capacity becomes a secondary concern, and the speed of SSDs make them very attractive.

SSDs aren't going to kill of hard drives entirely, but they are going to take a decent chunk of the market away from the rotating disk sellers.

Re:New solid state storage (1)

ArcherB (796902) | more than 2 years ago | (#40110565)

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

Disk drives may be replaced, but they won't be going anywhere. What we are starting to see is SSDs replacing HDDs as the primary, boot, OS and application drive. HDD's are kept around for mass storage for photos, videos, music, documents, and even some larger applications. I see HDDs replacing tape drives in the future for readily accessible backups.

Re:New solid state storage (1)

iamhassi (659463) | more than 2 years ago | (#40110605)

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

This. Hard drives are dead. SSDs are less than $1 a gigabyte. [newegg.com] Down from $4 a gigabyte just 2 years ago. [anandtech.com] At the rate SSDs are dropping in price why even consider a hard drive when you can buy now for $1/gb or wait a few months until it's 50 cents/gb or another year until it's 10 cents/gb? Few hundred gigabytes is more than enough for the average user.

Good-bye rotational media, I will not miss your slow access times.

Re:New solid state storage (1)

0123456 (636235) | more than 2 years ago | (#40110737)

And HDDs are $150 for 3,000GB.

Re:New solid state storage (1)

Jesus_666 (702802) | more than 2 years ago | (#40111171)

That's not going to happen. SSDs aren't going to shrink much anymore; they can't make the transistors significantly smaller as Flash doesn't perform well at such small sizes. We're already seeing SSDs becoming less and less reliable due to this. (Okay, they might release Flash drives at 10 cents/GB but I certainly wouldn't trust those drives with my data. Not without a backup to a more reliable drive.) Besides, HDDs are still under active development so the goalposts keep moving.

I'd love to see HDDs getting replaced with something that's faster, more energy-efficient, more shock-resistant and more reliable. Unfortunately, Flash isn't that technology due to its scaling issues. Perhaps the memristor will be the technology that displaces the magnetic platter but it's still a few decades away from that point.

Re:New solid state storage (1)

Hatta (162192) | more than 2 years ago | (#40110613)

Such as? What technology do you realistically expect to provide similar capacities to spinning discs for similar prices in 2 years?

Re:New solid state storage (2)

MasaMuneCyrus (779918) | more than 2 years ago | (#40110641)

You say this hot on the heels of the report of 60TB HDDs by 2016 [slashdot.org] .

HDDs aren't going anywhere. I think the near-term future is hybrid systems like Intel's Smart Response becoming more advanced and commonplace--moving the files (and/or entire operating system) that you actually use onto the SSD while keeping the big stuff on the HDD.

collusion? (1)

Blob Pet (86206) | more than 2 years ago | (#40110299)

I haven't been keeping up on this subject the last couple of months, but I was under the impression that the operations at the drive manufacturing plants were going to return to normal sooner rather than later. I would think that would cause prices to drop, even with the consolidation of the vendors. Otherwise, I'd suspect price-fixing.

Re:collusion? (1)

fnj (64210) | more than 2 years ago | (#40110621)

Price fixing? YA THINK?

Re:collusion? (1)

BenJeremy (181303) | more than 2 years ago | (#40110711)

This is all reminiscent of the Sumitomo event in the early 90s... when RAM prices tripled overnight. Forget the fact that there was a 6 month stockpile at the plant of the epoxy resin they could not produce until the plant was rebuilt... forget the fact that the manufacturers also had their own months-to-years supplies of the resin, and that the resin was a small fraction of the cost of RAM... prices TRIPLED OVERNIGHT. RAM manufacturers took their sweet time getting back to normal pricing, even though the factory being offline had ZERO EFFECT on the costs and ability to make RAM chips. They did so because they could make record profits after their margins had been cut to a sliver pre-Sumitomo.

The lesson learned and implemented by the HD manufacturers from that incident was that you could use the supposed "recovery" period to raise your margins and gain enormous profits.

Sadly, it's a short-sighted strategy, because the higher prices have pushed more consumers to spend the extra money on SSDs, which have now come down low enough in price and are available in large enough capacities to satisfy most consumers. Does an average consumer really NEED 2TB on their desktop? Most of the people that needed that sort of storage already purchased it before the floods, and those that still do are probably willing to hold off a bit longer. The SSD market is a virtual shark tank, and the format has gained miles on the platter drives' market share.

Meanwhile, the HD manufacturers are probably re-tooling their plants to handle even higher density platters, pushing up platter drive capacities above 6TB. The "sweet spot" will always be $200 for these drives in the consumer market, which drives down the price of those 2TB drives considerably (back down to pre-flood prices).

No price fixing really needed, though.... just a lesson learned and reduced pressure from the competition as they all decide to take a breather from the normal competitive price wars they've been engaged in. They can't ignore the SSD market for long though... $/GB is the only real benchmark that sets them apart from SSDs now, and the Hare is spending way too much time napping!

we can hold off a long time (0)

Anonymous Coward | more than 2 years ago | (#40110307)

At some point they'll be done feeding pent-up demand.

It doesn't work that way (2, Insightful)

Anonymous Coward | more than 2 years ago | (#40110325)

This really is Economics 101. The maximum profit margin comes at the point where the supply curve and the demand curve meet. Raising prices above that point results in fewer sales and therefore less profit. Companies won't stop following this rule just because they have an "excuse" for raising prices. Partly because they didn't need an excuse in the first place, but mostly because they still have to compete with other companies.

Re:It doesn't work that way (3, Funny)

Fallingcow (213461) | more than 2 years ago | (#40110441)

This really is Economics 101. The maximum profit margin comes at the point where the supply curve and the demand curve meet. Raising prices above that point results in fewer sales and therefore less profit. Companies won't stop following this rule just because they have an "excuse" for raising prices. Partly because they didn't need an excuse in the first place, but mostly because they still have to compete with other companies.

Maybe you should have stuck around for Economics 102.

Re:It doesn't work that way (0)

Anonymous Coward | more than 2 years ago | (#40110481)

Evil profits, damn it, even the slave waged countries are making a profit, don't rest my friends we must absolutely must stop this.

Re:It doesn't work that way (1)

Mashiki (184564) | more than 2 years ago | (#40110805)

Maybe you should have stuck around for Economics 102.

This is the part where everyone learns about nVidia and ATI colluding to set videocard prices right?

Re:It doesn't work that way (2)

JesseMcDonald (536341) | more than 2 years ago | (#40111091)

Maybe you should have stuck around for Economics 102.

If Econ 102 contradicts Econ 101, then someone messed up. At worst, the rules taught in 101 may not hold in all cases—but the boundaries should have been part of the 101 curriculum.

Anyway, the concept of supply vs. demand and the optimal price-point are fundamental to all levels of economics. There is nothing wrong with what the GP wrote. The part which was omitted, however, is that the "excuse" of rising costs pushes out the marginal producers, reducing the supply and thus raising the optimal price-point for those who are left. How much that price increase depends on a number of factors, including the elasticity of demand, the degree of competition, and existing production margins (i.e. how much the suppliers can afford to absorb before it becomes more economical to close shop or shift to a different product).

Re:It doesn't work that way (0)

Anonymous Coward | more than 2 years ago | (#40110475)

Do you not understand what collusion is?

It kind of does. (3, Informative)

Anonymous Coward | more than 2 years ago | (#40110499)

In a perfectly competitive market with elastic supply and demand and where there are completely rational and well-informed consumers and producers, yes, your description of the market works.

The problem is, this is a case where there are only two major suppliers, demand is relatively inelastic, and the vast majority of consumers have no idea what a hard drive costs to make. In other words, what you're seeing is more like monopoly utility pricing - and that means that as long as higher prices can be reasonably justified to the consumer (flooding in Thailand!) the producer can set and maintain higher prices basically at will.

Re:It doesn't work that way (0)

Anonymous Coward | more than 2 years ago | (#40110501)

I'm guessing you failed Economics 101 because the situation you are describing is Perfect competition. The situation with WD, Seagate and Hitachi is Oligopoly which, as you can see, results in cartels.

Re:It doesn't work that way (0)

Anonymous Coward | more than 2 years ago | (#40110577)

Exactly. The prices are what we, the customers, decide they are. If you want that hard disk so bad you gonna pay extra, then go for it. On the other hand, if it's somewhat too expensive a proposition currently, then hold off for awhile. Very simple maths.

Re:It doesn't work that way (0)

Anonymous Coward | more than 2 years ago | (#40110663)

If you hadn't slept through Econ 101, you'd know that that supply/demand curve theory breaks down when you have a monopoly or a few colluding companies that can take advantage of inelastic demand.

People have to buy more hard drives eventually. Therefore companies can set the price as high as they want, provided no one undercuts them.

Fundamental problem with economics (2)

istartedi (132515) | more than 2 years ago | (#40110765)

Companies are run by people. People are NOT rational. Alan Greenspan cited this as a problem, although IMHO Greenspan's bigger problem was to accept that corporations are people and then to assume that they were rational.

Rational actors maximizing profit is theory. Reality is insane people "managing" things into oblivion. If the HDD manufacturers try to squeeze the market to the point where solid state displaces HDD everywhere, and they fail to extract maximum profit because they are greedy, that will not surprise me one bit.

Re:It doesn't work that way (0)

PatDev (1344467) | more than 2 years ago | (#40111073)

This really is Economics 101. The maximum profit margin comes at the point where the supply curve and the demand curve meet.

Methinks you should look up "profilt margin", and particularly how it differs from "profit". Profit *margins* can be driven arbitrarily high by raising the price arbitrarily high.

Fires in DRAM factories (0)

Anonymous Coward | more than 2 years ago | (#40110339)

So.. Collusion to keep prices artificially high? Yeah, I smell some antitrust action coming.

That flood worked out great for them, though.
In other news Western Digital and Seagate to relocate their manufacturing facilities to flood plains beneath leaky, poorly maintained earth dams..

Record profits come at a cost.... (1)

Anonymous Coward | more than 2 years ago | (#40110375)

... both drive companies have cut their warranties on consumer drives. Seagate to 1 year an WD to 2. A damn rip off if you ask me. I'd say don't buy a new drive unless you absolutely have to. I have no idea why seagate thought cutting it's drives to 1 year warranty was a great thing. It just pushed me over to WD easily. Not having a 3 warranty _at least_ IMHO is a big drawback.

Re:Record profits come at a cost.... (0)

Anonymous Coward | more than 2 years ago | (#40110497)

Why do profits come at a cost? Sure for the consumer but for the manufacturer? Lower warranties further increase profits. It's a win-win for them.

Re:Record profits come at a cost.... (2)

sexconker (1179573) | more than 2 years ago | (#40110559)

Why do profits come at a cost? Sure for the consumer but for the manufacturer? Lower warranties further increase profits. It's a win-win for them.

Because when I can't buy a new hard drive that's guaranteed to last more than 2 years I don't buy a new hard drive.

Re:Record profits come at a cost.... (0)

Anonymous Coward | more than 2 years ago | (#40110609)

I remember some people a few years ago on slashdot boasting that they dropped their hard drives on the ground just before the warranty was up, and then sent off for a new drive. Well that didn't end too well .....

Re:Record profits come at a cost.... (1)

fnj (64210) | more than 2 years ago | (#40110721)

... both drive companies have cut their warranties on consumer drives. Seagate to 1 year an WD to 2. A damn rip off if you ask me. I'd say don't buy a new drive unless you absolutely have to. I have no idea why seagate thought cutting it's drives to 1 year warranty was a great thing. It just pushed me over to WD easily. Not having a 3 warranty _at least_ IMHO is a big drawback.

So you left Seagate in favor of the manufacturer with even shittier quality drives? Not so smart.

Warranty periods are not the only thing that matters. When you get a warranty replacement, it's gonna be somebody else's return, either refurbished, or just turned around and sent to you as-is cynically hoping you won't notice any problem with it, or the other guy might have jumped to a conclusion. Don't laugh. That's how they operate. So your replacement is very unlikely to last.

Re:Record profits come at a cost.... (1)

Mashiki (184564) | more than 2 years ago | (#40110837)

All of the drive manufacturers did this back in the very early 2000's, and then there was this huge collusion case against the entire lot of them. About fixing drive prices, and warranties. I have a feeling the same thing will happen again, just a feeling. Only because I see the similarities.

And pushing people to SSDs (1)

Sycraft-fu (314770) | more than 2 years ago | (#40110965)

WD and Seagate are morons in my opinion because neither have any kind of serious SSD lineup (both only have a couple enterprise parts, and I never see them mentioned on the list of companies to buy from). Higher HDD prices are just going to drive more people to SSDs as the SSD prices drop. It isn't a matter of competing on an equal dollar per GB amount, it is a matter of people close enough in absolute dollar terms.

So someone goes HDD shipping for a desktop, they find that it is somewhere in the $80-200 range, depending on what drive they want and what size. They look over at SSDs and discover, what do you know, you can have an SSD for that price. 128-160GB is perfectly doable in that range, maybe larger with sales (SSDs go on "sale" all the time).

Now it isn't near as much as an HDD. The HDDs are in the 500-2000GB range. However the person looks at their usage and discovers that they really don't use that much space, they can pack all their stuff in to 160GB no real problem. So they go for it, because of the massive increase in speed (an order of magnitude better seek times or more).

I've seen it happen many times. A friend just got a new laptop with a 160GB SSD. He was thinking about a 750GB HDD since he could store a lot of stuff, but looked and decided he really didn't have that much he needed and would rather have the speed.

While the HDD market isn't evaporating overnight, it is getting cut in to bigtime and it'll only get worse if the price differential changes.

HIGHER DEMAND = HIGHER PRICES (1, Informative)

brian0918 (638904) | more than 2 years ago | (#40110507)

People love to shout "COLLUSION!" when more of their fellow consumers are buying the products they want - due to a) pent-up demand, and b) consumers hoarding products as protection against future price increases - but it's really just reality they are fighting against.

Reality is not going to change, and all you do by trying to fight it (i.e. by demanding the government intervene and impose price controls) is destroy the companies whose products you enjoy and depend on.

Re:HIGHER DEMAND = HIGHER PRICES (0)

Anonymous Coward | more than 2 years ago | (#40110687)

In what way is collusion mutually exclusive from reality? In what way is having companies existing only because of collusion good for the economy? If government insistence on stopping collusion would destroy the companies, then by definition they should be destroyed, yes?

Re:HIGHER DEMAND = HIGHER PRICES (0)

Anonymous Coward | more than 2 years ago | (#40110695)

Reality is not going to change, and all you do by trying to fight it....

I also do not generally believe that government intervention usually helps the economy, but this quote really represents a crappy world-view. Reality certainly can and does change all the time. Some realities are clearly more difficult to change than others, but nobody is completely helpless. Okay, that concludes my inspirational speaker moment of the day.

More on-topic: There is still a portion of the population that would buy if the price was lower, like me. I would buy several if the price dropped near to early-2011 prices, but my need isn't so great that I couldn't wait up to a year more to see those price drops. I don't think it will take as long as people think for a race to the bottom to begin; just let the market work... unless there is evidence of actual collusion, in which case it's clearly time to put a stop to that.

Re:HIGHER DEMAND = HIGHER PRICES (0, Troll)

Anonymous Coward | more than 2 years ago | (#40110703)

Right, and your high school econ lesson makes it all ok. Sorry buddy, but history tells us when we hear "Oh no, prices really are higher. Its for your own good. Capitalism is working!!!" it means we're being shit on. And we've been shit on lately. A lot.

We've gone from a dozen HD manufactures to two. (In most spaces) This is a recipe for abuse. This is exactly the time anti-trust regulators start asking polite questions. If the companies don't get the hint, then less polite questions and embarrassing inquiries happen. It's at this point we start seeing emails between VP's suggesting they take advantage on a situation with euphamisims like 'cooperatively easing channel saturation'

Not to mention, that with so few parties and so much consolidation is why we got in to this mess in the first place. I'm sure as fuck mad that a flood in one part of one country was able to nearly cripple a dozen high tech industries. We need more players, with more manufacturing plants, in more diverse locations. It's in everybody's interest.

Not collusion in any meaningful way. (1)

RightSaidFred99 (874576) | more than 2 years ago | (#40110515)

If you're making record profits, you don't change your prices. Neither do your competitors. Both could very well _independently_ come to this conclusion regardless of the actions of the other.

Plus the ripples from Thailand will still be felt for a long time, I wouldn't expect prices to have reached equilibrium yet.

Re:Not collusion in any meaningful way. (1)

Baloroth (2370816) | more than 2 years ago | (#40110799)

However, if you have many companies on the market, the possibility that someone will cut prices and undercut you record profits prevents you from keeping prices high. With basically only two companies in the market, the fear of that happening is minimal, especially since both know the other is making a lot of money as well, and understandably wants to keep making that money at those margins (while a third company might be willing to sacrifice margins for increased volume). It's not collusion, but it certainly isn't good for consumers and shouldn't have happened.

Re:Not collusion in any meaningful way. (1)

marcosdumay (620877) | more than 2 years ago | (#40111149)

If you're making record profits, you don't change your prices. Neither do your competitors.

Yep, you do that untill some brandless chinese company appears and takes all your market from you.

Sigh (0)

Anonymous Coward | more than 2 years ago | (#40110521)

They had a quarter where things seem to have stabalized at a bit higher than before, and they're making more profit than normal. This is a bad thing and collusion and it's probably related to the mergers and lack of competition. Totally not about them getting shafted by rebuilding costs because their factories flooded and destroyed a bunch of stuff during the few quarters before. No only look at this quarters profits. What evil corprate greed. They should be shamed.

Inflation (0)

Anonymous Coward | more than 2 years ago | (#40110631)

You mean increasing the money supply causes prices to rise?

Re:Inflation (0)

Anonymous Coward | more than 2 years ago | (#40110971)

Bingo. Demand as well. The west is now competing with productive, emerging economies for it's products. Hundreds of millions of Chinese are buying the exact same stuff as you, only they have an economy that creates real, material wealth with which to fund their consumption.

Just reviewed prices online - what's the big deal? (4, Insightful)

rsborg (111459) | more than 2 years ago | (#40110701)

It seems like the 2TB desktop (ie, 3.5") disk is about $110. That's not so bad, considering I bought one for $95 about a year ago, before the floods. A 3TB is $160, about the same as last year from my recollection.

Of course, if you're buying 4x (say to build or replace a NAS), then you do see a noticeable cost difference, but it's not even 25% more.

A 16% (or even 37%) margin is does not indicate windfall profits or ludicrous extortion.

Re:Just reviewed prices online - what's the big de (-1)

Anonymous Coward | more than 2 years ago | (#40110849)

The thing is that prices usually go down on hardware (for the exact same hardware) as the newer and better stuff is released. But in this case, it's actually gone up. So this is a pretty big deal.

Seeing a my 1st hard disk cost $80K per megabyte (1)

Anonymous Coward | more than 2 years ago | (#40110707)

Seeing a my 1st hard disk cost $80K per megabyte, I don't complain, much, about paying $78 for a terabyte.

Stupid to think they would just back down. (0)

Anonymous Coward | more than 2 years ago | (#40110763)

These companies suffered major damage and lost a lot of money. If the consumers think "Hey they are back in business they should just drop their prices back down right now" thats stupid because they have a lot of lost money to recover. Not to mention they are a business and making money is what the do.

Look into my crystal ball (1)

slashmydots (2189826) | more than 2 years ago | (#40110791)

I just picked up a 60GB Intel SATAIII SSD with around 550/450MB/s read/write for $65 on sale at newegg business. There's an SSD on crazy clearance sale every single day from Newegg and Infotel (aka Tiger Direct). 120GB went from $190 to $130 on average in the last couple months. So, until they come out with those 40TB spinning drives I heard about on Slashdot, I think traditional hard drive companies are going bankrupt if they don't change their prices or start making SSDs. I do have a feeling though that they're artificially inflating prices to raise capital in order to buy out a respectable but relatively small flash chip manufacturer like OCZ or Patriot. I think WD and Seagate could each afford that but their books look like crap from the shortage. Then they'd make both and tada, they're back in the market.

Gasoline / Petrol = Same (0)

BigSes (1623417) | more than 2 years ago | (#40110935)

Always happens in the petroleum industry as well. Cartel collusion. War, summer travel season, weather creating shipping issues, refining problems, you name it. The price always goes up in large increments, and IF it comes down, never returns to its previous levels. I'm not amazed this happens in any other industry. Why should you stop reaping higher prices when supply returns?

Re:Gasoline / Petrol = Same (0)

Anonymous Coward | more than 2 years ago | (#40111125)

If demand were more elastic, when supply returned to a normal level, people would stop buying and prices would fall.

That is not the case with gasoline and apparently hard drives. :)

Re:Gasoline / Petrol = Same (0)

Anonymous Coward | more than 2 years ago | (#40111203)

Except that petroleum supply actually is limited, it is getting harder and more expensive to find (why do you think they're drilling in >2000m of water?) and the supply will eventually decline. There's no reason to expect oil and gas prices to drop in the long term unless a new energy supply comes on-line to replace them more cheaply. It will wiggle up and down due to all the reasons you listed, but on average it's up until it is ultimately replaced.

Production != Availability (1)

the eric conspiracy (20178) | more than 2 years ago | (#40111021)

While WD production is more or less back to what it was, there is still a lot of pent up demand for drives because of the past 9 months of high prices. This demand is providing impetus to keep prices up.

In addition contracts with vendors were signed at higher prices during the shortages. These contracts have not expired yet, keeping prices higher than they were when the floods occurred.

Exxon, et. al.? (1)

FreshlyShornBalls (849004) | more than 2 years ago | (#40111179)

Looks like someone learned a little something from the oil industry: Natural Disaster; Raise Prices, blaming the disaster. When the disaster's effects are neutralized, do nothing. Profit!
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