back to article HDD prices to remain 'inflated' until August

HDD prices are falling eight times more slowly than they rose in the weeks after the flooding in Thailand and look likely to remain inflated until mid-summer. Idealo.co.uk monitored vendors' online average selling prices (ASPs) across its five price comparison portals and found that disk drives went up 100 per cent in 33 days …

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  1. Yag
    Unhappy

    "But they are now back to working off micro margins, small single-digit percentage points"

    aaawwww, poor them!

    1. Anonymous Coward
      Anonymous Coward

      Re: "But they are now back to working off micro margins, small single-digit percentage points"

      Spoken like someone who hasn't tried to run a business on sub-10% margins. It's hard enough at 30%. This is not a matter of "10% of gross sales = Money for Ferraris and Golf bags".

      Particularly because that's *margins*, not *profits* or *sales*. That means that you make something for $100.00 and sell it for $109 or less. All of that money has to go to the entire rest of y our operations - facilities, IT, non-manufacturing staff, marketing, legal, support, financial. But the more things you have to make, the more those costs go up - and the lower your margin, the less you have left to pay for all of it.

      Margins are NOT profits. If you can make a profit on a 9% margin with a consumer product, then you should get into the business, 'cos that ain't easy. It's not easy with that margin on ANYTHING.

      10% operating profits are reasonable generally speaking, and no, you will not get 10% operating profits on 5% margins. You cannot make it up in volume. :P

      Hard drive manufacturers are in a brutal, brutal business, and if I were in their position, you're damn right I'd get as much margin as I could given my competitors' pricing. For one thing, I'd like to have cash on hand to keep operations going if there's a biblical glut instead of a biblical shortage.

    2. Anonymous Coward
      Anonymous Coward

      Re: "But they are now back to working off micro margins, small single-digit percentage points"

      Make do until the price has fallen.

    3. Anonymous Coward
      Anonymous Coward

      business i about profit

      so no profit no business, would you work for free?

      BUT

      Unfair exploitation is another thing

      1. Anonymous Coward
        Anonymous Coward

        Business is about profit?

        Nope. Business is about short-term cash in the pockets of the major shareholders.

  2. Destroy All Monsters Silver badge
    Pint

    Economically confused cynics?

    "but cynics might say vendors vendors have exploited the shortages"

    Code for "I want the price to be lower but there is no-one who wants to sell at that price"

    Surprise! Tautologically, demand and supply curves do, indeed, give the current price.

    If the current price is not where you want it to be, well, too bad.

    Beer because Guinness at 5.20 EUR per pint, WTF??

    1. Anonymous Coward
      Anonymous Coward

      Re: Economically confused cynics?

      "...the world's largest distie Ingram Micro confirming that hardening disk prices gave Q4 profits a lift."

      There it is - straight from the horse's mouth. If it wasn't exploitation there would be no associated profits lift would there.

      Blatant too. "Profits lift", how much nicer than "profiteering".

      1. Anonymous Coward
        Anonymous Coward

        Re: Economically confused cynics?

        Uhh, you can't have profiteering on something that isn't a necessity. Unless you drink hard drives, price increases are not equivalent to charging $100 for a sheet of plywood after a hurricane.

        It may be somewhat sleazy, but the market enables it to be so, and it is certainly far from profiteering.

    2. JEDIDIAH
      Linux

      Re: Economically confused cynics?

      I can wait.

      These greedy wankers can pound sand for all I care.

      My last batch of drives are doing great. The one before that is still holding up. Don't foresee great need for awhile. I can wait them out.

      Elastic demand can be a b*tch.

  3. mrfill
    Pirate

    Shed no tears for them

    In November, after a couple of months flooding, the wholesale price had increased by ~20% whereas retail prices had shot up by 200% and now they have dropped by 20%. Bit like the oil companies who up the price of fuel as soon as the oil price rises and then make some feeble excuse to maintain the high price when the oil price falls while blaming fuel duty (which hasn't increased).

    Most of the plants were back up and running at the end of December and I saw almost no evidence that there had been any flooding anywhere in the country - certainly nothing much that affected normal life/business.

    Its just the usual capitalist rip-off

    1. Figgus
      Facepalm

      Usual capitalist rip-off

      As opposed to the usual socialist rip-off, where the drives would just now be hitting 20GB and cost over a thousand $USD.

      For all it's perceived flaws, capitalism is still far better for people's standard of living than any alternative has been.

  4. JC 2
    WTF?

    Bad Numbers Make For Bad Statistics

    Is it the article text that is unclear or is the data only applicable to the UK? One paragraph mentions 3.5" models were the hardest hit by the price hikes but a few paragraphs (er, sentences actually...) later we read that a 1TB HDD was selling for $100, 40% higher than before the crisis.

    Why are they using dollars if it is not speaking about the US market? In the US 1TB HDD did not cost $71 (with a 40% rise to $100 after) before the crisis. It might have been the full retail price which nobody paid, as the US market had recurring sale prices under $80 for 2TB 3.5" and certainly the volume sales to OEMs was lower still.

    If talking US market, at one of the most popular merchants on the 'net (Newegg.com), their cheapest 1TB 3.5" HDD is currently $107 delivered. Pre-flood price was $50 (or less), an over 100% rise is still present today. Granted if one considers sale prices, today we can get a 2TB 3.5" for $110, but that's still close to 200% of the pre-flood sale price.

    There is another issue. If prices merely drop back down to pre-Thai-flood levels by August, they are still inflated prices as price per capacity would have dropped below pre-flood pricing by then. At least Seagate already had their next density increase worked out and ready for production and possibly others by then. It's conceivable that we'd have been under $100 for 3TB by mid summer without the floods.

    1. Oninoshiko
      Holmes

      Re: Bad Numbers Make For Bad Statistics

      As pointed out by the Raspi guys, distributors all price in USD.

      I Think the article was refering to commercal distributors (like Ingram Micro, AVNet, etc), not retail merchants (Amazon, Newegg, CDW, etc.). Retail mercants fall at a slower rate then distributors.

      1. JC 2

        Re: Bad Numbers Make For Bad Statistics

        but the numbers are still either wrong or non-applicable, nobody would have paid a higher price pre-flood to buy at single unit pricing from a distributor instead of the lower pricing from a /retail/ merchant. If one talks wholesaler pricing they must talk volume pricing that is lower than the middleman retail merchants charge. It is necessarily so or there could be no retail merchants.

    2. TGS08
      Thumb Up

      Re: Bad Numbers Make For Bad Statistics

      The article is a bit unclear. The author is mentioning multiple sources throughout the article. Most of the information and figures are coming from a report written by the UK price comparison website Idealo.co.uk. Their full report can be found here:

      http://news.idealo.co.uk/news/13586/hard-drive-price-watch-2-0-five-months-into-hdd-shortage.html.

      The price data used in Idealo's report represents five European countries, but only provides prices in GBP. So, while much of the data is (i.e. rates and percentages) is applicable to Europe in general, it was obviously written for those in the UK.

      Later in the article, the author begins to reference other sources, i.e. Avent Tech Solutions & Ingram Micro. The prices referenced by these sources are in USD.

      Your last issue is a very good observation. One of the articles referenced in Idealo.co.uk's report is a press release from IHS iSuppli. It can be found here:

      http://www.isuppli.com/Memory-and-Storage/News/Pages/Thai-Floods-Continue-to-Impact-Hard-Drive-Manufacturing-with-High-Prices-and-Short-Supplies-Lingering.aspx

      In it, IHS's analyst predicts year-over-year growth of HDD shipments not until the 3Q of 2012. It also cites multiple factors leading to inflated prices throughout 2012, including „higher costs associated with relocation of production“ and less competition in the industry due to the big mergers of Seagate/Samsung & WDC/Hitachi.

      It will be interesting to follow this throughout the year to observe how quickly the prices return those non-inflated HDD prices in that alternate universe where the HDD-shortages never occurred.

  5. Oninoshiko
    Unhappy

    This is causeing me fits...

    I still can't get Nearline SAS-2 disks.

    Maybe I'll check in with Ingram on monday.

  6. Anonymous Coward
    Anonymous Coward

    August?

    By then 1 Terabyte 2.5 inch SSDs will be under five or six hundred quid. How much porn can anyone store?

    China is now churning out Nand, so I heard in the pub, so I expect SSD crash in the coming months.

    1. Anonymous Coward
      Anonymous Coward

      Re: How much porn can anyone store?

      I don't know, but I am willing to act as a test case.

  7. Chris Schmid

    It is just pure economics...

    This was so predictable, in December 2011 already:

    http://bluside.wordpress.com/2011/12/09/a-black-swan-making-the-world-green/

    Businesses are just egoistically driven by maximizing profit, that is the system we chose. So you only need to do the math and with only 3 players left in the game, it was crystal clear that this happened. Who want's to live off micro margins if they suddenly realize they demand for storage is inelastic? By the way, they are not even to blame, it's us all who think storage must become a commodity or even a free good. It is just pure economics...

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