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Despite supply coming back, HDD makers will keep prices inflated

Written by Andre Yoskowitz (Google+) @ 05 Apr 2012 20:00 User comments (29)

Despite supply coming back, HDD makers will keep prices inflated Last year, a historical flood in Thailand left 13 million people homeless and a significant amount of factories with over 3 feet of water.
Many of those factories were used to produce hard drives and the flood has led to a industry that has huge demand and small supply equaling bad news for consumers. In fact, over a few months, average prices on HDDs rose 47 percent, taking Western Digital's margins from 19 percent to a healthy 32 percent, even more than Apple makes on some of its devices.

Today, research firm IDC says that although supply is coming back quickly, the HDD makers are in no rush to drop the prices back to pre-flood times.

Says IDC: "HDD vendors are taking advantage of this opportunity to reset prices and recover some of the excessive price erosion that began in 2009." John Rydning of IDC says the higher margins will let HDD makers create new tech into the future, but the R&D now will likely not be seen in consumer products for another two years.

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29 user comments

15.4.2012 20:18

Exactly what I predicted in the last article about this.
That the HD manufacturers were getting sick and tired of the prices being expected to be at $79.99 for mass market HDD's so they are artificially inflating the price and blaming it on this crap.

I've been buying consumer HD's forever. The price is/was predictable. Wait until the drive you want goes on sale for $80 and then buy.
It seems as if they want to set that bar at $120 now.


Oh, Im sorry... Did the middle of my sentence interrupt the beginning of yours?

25.4.2012 20:36

I'll wait for the prices to come back down again.

35.4.2012 20:42

Greedy A$$h0les.

45.4.2012 21:20

You should feel dirty to have that gross PR euphemism on the page.

"Price erosion" = market competition.

"Recover some of the excessive price erosion that began in 2009" = "Recover" from a state of pro-consumer competition.

This message has been edited since its posting. Latest edit was made on 05 Apr 2012 @ 21:21

56.4.2012 1:52

Yeah no surprises here. You see this everyday with gas prices.

66.4.2012 3:14

I'm not buying another drive until they come back down in price. Perhaps this is SSDs' big chance to catch up with HDD pricing and topple the greedy hard drive cartels.


86.4.2012 7:53

I think we all knew this would happen, which is kind of sad. I was going to buy an external hard disk, but now I think Ill wait another six months in the hopes that the prices will drop. Perhaps we will see a new market entrant selling HDD at realistic price, that will undercut the current competition :D

Also on that price erosion bit, they were in competition with each other, that always brings down prices, then there was a substitution service that consumers started using, cyber lockers. But with the current political climate and the war on 'Piracy' HDD manufacturers will feel less threaten by cyber lockers.

96.4.2012 9:29

Originally posted by jeff_2:
I think we all knew this would happen, which is kind of sad. I was going to buy an external hard disk, but now I think Ill wait another six months in the hopes that the prices will drop. Perhaps we will see a new market entrant selling HDD at realistic price, that will undercut the current competition :D

Also on that price erosion bit, they were in competition with each other, that always brings down prices, then there was a substitution service that consumers started using, cyber lockers. But with the current political climate and the war on 'Piracy' HDD manufacturers will feel less threaten by cyber lockers.
I agree, I thought about storing my data online, but with the justice department's war on piracy, I decided to keep my data on external HDD's. Doesn't matter if you have or don't have pirated data (Software, movies, music, etc.) lots of people had legitimate data on Megaupload and looked what happened.

106.4.2012 9:48

This trend could be construed as 'price fixing'.

The manufacturers need to watch their communications with each other very carefully while this is going on.

116.4.2012 11:51

Meet the "Gas" for your PC. Maybe I should invest in Seagate and WD? Anyone for speculation on HDD's?


“Breathe in. Breathe out. Breathe in. Breathe out. Forget this... and attaining enlightenment is the least of your problems.”
–Zen Judaism by Someone Clever

126.4.2012 14:17

Profiteering all the way. Really sick of this. Just another case of the "what the market will bare/bear". I really do wish someone would have the balls to pull a Sam Walton (the old, "REAL", Sam Walton, not this crap passing for him now) & bring back the "stack it high & watch it fly" sales approach.

It would be nice to see a group of companies actually give a shit about their consumer base as apposed to 'selling' us on believing that they actually care. You know, actions speak louder than words.

God forbid they drop the prices to $60 & folks buy 2 drives. I mean is it me or are there folks running 2 for one or BOGO sales all over the place as I write? It damn sure wouldn't kill them.


136.4.2012 18:08

This won't bother me as I have too many old drives on the shelf screaming to be used. I will wait to the prices drop.

146.4.2012 18:24

I just had to buy one last week and was happy to pay $130 for 2Tb.
Makes me sick to pay that much.

I could use a couple more but I'll certainly not "stock up" until some company comes along and offers me a drive at a decent price.


Oh, Im sorry... Did the middle of my sentence interrupt the beginning of yours?

156.4.2012 21:54
kettlechips
Unverified new user

So for giggles and grins, I just looked through my Newegg order history and found the 1TB Samsung Spinpoint F3 HD103SJ I bought on Dec 3 2010 for $70, it's been just fine for me in two gaming rig builds so far (i don't do anything too nutty like RAID or heavy data-streaming, just gaming), click the link and lo and behold newegg is still selling it, but for $140!!!! it literally DOUBLED in price as a result of this price-speculation madness...i mean, if it was actually that bad then how were any of these companies making money before? how does one hiccup justify doubling the price on the same PC product over a year later?

i can understand that an environmental disaster can be a massive hardship on a tech manufacturer, but they should've thought of that when they decided to build the factory there...it's why NEC favors the semifab down the street from me here in northern california so much, because their 7 or 8 other fabs in Japan are under constant threat of monsoons, earthquakes and floods

i was dead-set on buying a 2TB drive for my rig today until i found this article...I think i'm gonna wait this out

166.4.2012 23:52

Originally posted by LordRuss:
Profiteering all the way. Really sick of this. Just another case of the "what the market will bare/bear". I really do wish someone would have the balls to pull a Sam Walton (the old, "REAL", Sam Walton, not this crap passing for him now) & bring back the "stack it high & watch it fly" sales approach.

It would be nice to see a group of companies actually give a shit about their consumer base as apposed to 'selling' us on believing that they actually care. You know, actions speak louder than words.

God forbid they drop the prices to $60 & folks buy 2 drives. I mean is it me or are there folks running 2 for one or BOGO sales all over the place as I write? It damn sure wouldn't kill them.

If folks hold off purchasing retail disk drives at the 'new (higher)' selling price, they will eventually have to lower their pricing to clear the older inventory out because the factories just keep churning out product.

They are probably overcharging us while they sell in bulk to the OEMs at the original 'old (lower)' selling price.

177.4.2012 4:55

I use to pay $89 for a 2tb HDD and I am not paying $150. I did indeed find it weird when I RMA a WD Black 1TB HDD a few months back that was acting up on me. When I got the new one the listed price was $69.99 if I lost the one I was shipping back they wanted $120.00 from me. Like others where saying where they ever really effected that bad with the floods?

This message has been edited since its posting. Latest edit was made on 07 Apr 2012 @ 4:56

187.4.2012 11:41

Excuse me, executives and the like of Western Digital, but artificially raising prices on your products to gain your own selfish interest does NOT get your products flying off the shelves but insults the consumer's intelligence, or did you get that memo by now? Guess not.


Chance prepares the favored mind. Look up once in a while and you might learn something. - BLUEBOY

197.4.2012 15:08
JIGS1
Unverified new user

Don't buy the hard drives force companies holding larger stock.

It'll be a bigger cost to hard drive manufacturers this way.

Be patient with SSD's far more innovative technology compared with mechanical drives.

Peace out

Pissed with greedy buggers.

207.4.2012 16:03

Seagate used to be located in Scotts Valley (Hwy 17) in Northern CA. still produces HDD at a different location in Cupertino close to Apple. Why would their prices follow suit of the far east disaster?

I lived less than 20 miles from the Cupertino plant.

http://www.seagate.com/ww/v/index.jsp?l...000dd04090aRCRD

Jeff

218.4.2012 1:39

FINE!!!!!!!!!!

Keep those prices inflated........and see how your sales remain minuscule!

I won't buy until they're reasonable again.......no one I know will either. Only would buy if an HDD failed and I absolutely needed one.

Talk about shooting yourself in the foot.

228.4.2012 18:36

You guys do understand the most basic of all economic principals right? Supply and demand? Yeah I will agree that I am not going to buy either. If I do then I will definitely be buying the best like a WD BLACK series. Besides this just pushes me to watch more porn thru streaming instead of downloading.

238.4.2012 20:13

Originally posted by kettlechips:
So for giggles and grins, I just looked through my Newegg order history and found the 1TB Samsung Spinpoint F3 HD103SJ I bought on Dec 3 2010 for $70
...
newegg is still selling it, but for $140!!!! it literally DOUBLED in price as a result of this price-speculation madness...
Ok, lets look at the math. The profit margin increases from 19% to 32%. That would work out to a drive increasing in cost from $70 to $74.85 (a net increase of 7%). Yet it doubles in price. So possibly it's not the drive manufacturers who are responsible for most of the increase.

Look at the math another way. With the profit margin changing from 19% to 32%, they can sell 40% fewer to make the same profit.

It's curious, but some of the opposite thing happens over and over in the memory market whenever there is too much capacity. The chip makers have to sell at a loss. How many people decide to pay more so that they are buying memory at the "Fair" price. Come to think of it, how many people have ever turned down a raise because they were getting more than they needed for basic housing and food and the like.

249.4.2012 11:14

Originally posted by wkehr:
Come to think of it, how many people have ever turned down a raise because they were getting more than they needed for basic housing and food and the like.
True... The biggest trick for getting people to turn down a raise (or not asking for a raise) was to offer them one that would put them into another tax bracket, thus defeating the purpose of getting the damn thing to begin with. It always looked good on paper, but you still didn't earn anything in the whole scheme of things.

Similar situation could be said to exist here. Manufacturers are still making their profits, but where's the value to the customer? What was a value at originally half the cost is now gone "and" they've now adding the bonus of losing their customer pipeline because of these games.

Sounds like another idiot college graduate that sat atop a 'good idea bomb' & sold it to the brass again, because this smacks of not looking down the 5 year road. I.e., another grab your money & run, let the next guy coming in live with it scheme.

2510.4.2012 18:53
Mikemc12
Unverified new user

Originally posted by LordRuss:
Originally posted by wkehr:
Come to think of it, how many people have ever turned down a raise because they were getting more than they needed for basic housing and food and the like.
True... The biggest trick for getting people to turn down a raise (or not asking for a raise) was to offer them one that would put them into another tax bracket, thus defeating the purpose of getting the damn thing to begin with. It always looked good on paper, but you still didn't earn anything in the whole scheme of things.

Similar situation could be said to exist here. Manufacturers are still making their profits, but where's the value to the customer? What was a value at originally half the cost is now gone "and" they've now adding the bonus of losing their customer pipeline because of these games.

Sounds like another idiot college graduate that sat atop a 'good idea bomb' & sold it to the brass again, because this smacks of not looking down the 5 year road. I.e., another grab your money & run, let the next guy coming in live with it scheme.
LOL putting them in a new tax bracket won't save you (the firm) any money, since even if you collect the income tax for your employees, you stop have to pay them all to the government. So you still pay more to the employee no matter which bracket he/she is in

2610.4.2012 18:55

There are MUCH better ways of staying out of a higher tax bracket.
Be careful, though. You might be accused of being rich and not paying your "fair share"!


Oh, Im sorry... Did the middle of my sentence interrupt the beginning of yours?

2713.4.2012 8:49

I wouldn't mind paying more for a product that is as dependable as they were years ago. 14 recent new drives - 14 defective!

2813.4.2012 10:24

I am surprised that so many readers feel that their buying or not buying of drives is going to make any difference to the manufacturers. The OEMs are the bread and butter for all of them. You and me are the caviar on the crackers. The prices will remain high only if there is some sort of price fixing already in place. It would not surprise me at all. We have a saying in Indiua for such people - Corporations are people, right ! - "Paiso Parameshwar" - literal meaning : "Money is THE almighty God". I guess this is true world wide.

The rate at which quite a few laptop users are shifting to tablets - with SSDs - soon there the supply will exceed demand and the prices will sky dive.

2915.4.2012 15:46

Love you Western Digital. But your prices are outrageous. So I wait. Other than the 2 velociraptors, you've had a clean track record. 13 terabytes will have to do for now ^_^ Just keep in mind, that quality control comes first. NOT mass production! I imagine most people go by the DOA rate, or longevity reviews ;)




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