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Drive Prices Increase – Who Will Suffer Most?

Drive Prices Increase – Who Will Suffer Most?

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Storagezilla calls out hard disk availability in his recent post.  In fact, I discussed the subject of drive prices last week with James Carter of Touchdown PR on my way to SNW Europe.  James highlighted he was seeing prices on standard drives having doubled recently.

I went back and looked at my last drive purchases – two Western Digital 2TB SATA-II drives at around £65 each.  Currently these are now retailing on Amazon for £150 each, with the latest 2TB drives around the £100 mark.

Prices have clearly risen sharply due to the flooding in Thailand, however I wonder, which vendor suffers the most in this scenario?

The most obvious answer would appear to be that the vendors with the least margin will suffer most.  Think of the likes of Drobo or Overland, who sell relatively low cost hardware.  Theoretically vendors such as EMC and Netapp should be able to swallow the additional cost, especially if they are already charging 10-15 times the underlying raw cost of the drive on a per terabyte basis.  The drive cost makes up a small part of their overall price.  The big vendors should also have the muscle to fulfill their demand first with what supply is available.

However I don’t think things are that simple.  Drobo arrays can be purchased without disk drives, allowing them to use whatever drives are available, so drive prices won’t hurt bare array sales.  These arrays also allow mix and match and to upgrade per drive, so are potentially more flexible.

Bear in mind savvy customers of EMC and others will have negotiated quarterly price erosion, so those on existing deals will probably not see much change.  I would expect the big boys to have hedged their supplies through multiple supply lines and stockpiles but their margins will be affected if supply problems persist.

It’s also worth thinking about efficiency at this point.  If you’re not using thin provisioning or other data reduction technologies, then you should be.  If your vendor doesn’t offer it, then there are plenty out there who do.  As prices rise, it may be time to look again at implementing these features and fixing the processes that stop you using them today.

One last thought.  Are NAND prices being affected?  If not then the SSD array manufacturers must be rubbing their hands together with glee.


About Chris M Evans

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  • Ed

    I think Consumer NAS provider will suffer most, simply because no one would buy HDD that are twice as expensive, and therefore will not buy a NAS until it is cheaper.

    While some argue people uses their spare HDD instead. I have yet to see anyone who buy NAS do this. The reason being we want new drive to replace the old for data safety reason.

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  • ChrisFricke

    I’m actually kinda hoping that spindled disk takes a beating over this unfortunate event if only to push advancement with SSD. Nothing moves innovation like a true challenge. If the economics of traditional disks becomes a bit less clear due to supply shortage then there is a window of opportunity for something else.

    Not that disk will go away but it’s amazing what a couple of percentage point shift in market adoption will do to build momentum.

    • admin


      I’m not sure SSD will sneak in the back door and replace HDDs that quickly. We’re pretty comfortable with the HDD form factor. Having said that I do agree with you that it would be good to see SSD get more of a foothold.


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  • http://fireyouritguys.com john

    Curious what the industry standards are for quarterly price erosion (flat rate for just drives or everything?)

    • admin


      So, I’ve seen negotiations of $/GB price where a price erosion of 5% per quarter was in place. Great deal if you can get it. Regardless, for enterprise deployments I’d be negotiating at least 5-10% erosion per annum.


  • http://www.abbotgroup.co.uk/solutions/fv.asp Lisa

    Great post about storage devices.

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  • Barney Stinson


    As you said before, I think big companies has a great stock of drive to continue manufacturing their arrays, anyway we are about to close Q4 so with the new year it’s likely a revision of prices.

    However, this is a temporary situation, while other technologies advance, SAS and FC drive’s prices will progressively drop.

  • http://www.storsimple.com/blog Ursheet Parikh

    Chris – My point of view is that this will end up being one of the key catalysts for alternatives for the storage optimization, cloud and SSD markets.

    1. Thin provisioning and data-deduplication become more relevant

    2. Capacity on demand from the cloud in a pay as you go model versus buy it all upfront makes a lot of sense

    3. Disk price increases make SSDs attractive for wider segments.

    Also – this sets a new normal for the disk drive manufacturers in that when it is a duopoly, similar to what has happened to the oil markets with a new normal price and margins for producers.

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