Coping with Higher Hard Disk Prices

Arthur Cole

Hard disk drive costs are still on the high side following last fall's flooding in Thailand, but is this really a question of supply and demand or are drive manufacturers milking the situation for profits?

Make no mistake, the profits are good. IHS ISuppli reported this month that HD revenues hit a record $9.6 billion in the first quarter despite a rather significant drop in units sold compared to pre-flood activity. In the third quarter of last year, shipments numbered a hefty 174 million units, while first quarter action hit only 145 million. That puts the average selling price (ASP) of hard drives at about $66.28, up from $51.49 before the flood — a 28 percent increase.

Things are slowly getting back on track, however, as production capacity continues to come back online. The bad news is that full production isn't likely for the remainder of the year, and given the amount of hoarding that has taken place in the channel and at top PC and systems manufacturers, prices are likely to be artificially high well into 2013. Like gas at the pump, price hikes tend to be immediate while decreases happen at a much more leisurely pace.

Of course, one person's pain is another's opportunity, and storage management firms have not been slow in getting the word out about ways to stretch drive capacities to their limits. Aptare's Kelly Lanspa, for instance, points out that with unstructured data volumes set to increase eight-fold or more over the next few years, storage visibility and optimization are the enterprise's primary weapons against ballooning costs. At the same time, greater awareness of how storage is used will produce concomitant savings and energy and cooling.

Long term, the price per GB will most certainly head downward as drive capacities hit new highs. Between now and 2016, expect areal densities to more than double, again according to IHSuppli, providing much-needed support for high-data applications like audio and video storage. Densities are set to rise some 20 percent per year, pushing today's 744 Gb per square inch to a staggering 1800 Gb as drive manufacturers max out current perpendicular magnetic recording (PMR) techniques and transition to more advanced designs like heat-assisted magnetic recording. Before long, then, we could be seeing single drives with upwards of 60 TB capacity.

Despite the recent volatility, magnetic storage will continue to cost less than solid state for a while longer. A cynic would say that storage companies are perfectly happy to keep the cost of hard disk drives as high as possible as long as they don't surrender market share to SSDs. However, that bit of logic overlooks the fact that all of the top hard drive manufacturers are also steeped in solid state as well.

In other words, no matter where market forces take the price of storage, your money winds up in the same hands.



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