People keep calling it price gouging to raise prices when supply dramatically shrinks, but the alternative is worse. It is an important balancing of market-prices. If you charge far less for a product of limited supply than people are willing to pay, you end up with a true shortage, where retail availability vanishes. I might be willing to buy a drive for $50 for an HD to expand my dvr, but unwilling to pay $100; someone else may be willing to pay $100 for a drive for a mission-critical machine. If supply is limited, and price restricted to $50, I may get it for my "less important" purpose while someone else cannot get it for a critical need. Without raising prices, the only way to prevent a true shortage is to monitor the reasons a customer is purchasing a drive and deny those "less important" purchases(I don't think anyone wants to have a "Department of Purchase Reasoning" validating every transaction). As for increasing the price of stock on-hand that should be "immune" to supply shocks from a future shortage: Prices work by expectation, sometimes over a long time. If I know I will need an HD sometime in the next month, and I see that prices will increase two weeks from now, I will buy now rather than later. Demand will increase immediately. Just as before, prices must increase to allow the market to prioritize purchases, because the stock on-hand is limited. Retailers may benefit temporarily from a sudden increase in the value of their inventory, but this is just a reality of the market.
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cheepstuff
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- Dec 13, 2008
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+1 for plwww, you have an idea about how a market works.
[citation][nom]mavroxur[/nom]It's funny how there's not going to be a shortage in supplies, as manufacturers and vendors keep inventory on hand. And what incentive does anyone have for the manufacturing to resume quickly? Since there's now a "shortage", manufactuers can jack up their prices and make a killing. Now, resellers can jack their prices up even more, and who gets screwed? The consumer. They'll drag out production delays as long as possible until the cash cow is milked dry first.[/citation]
please read the article more carefully:
There is a real supply problem in the HDD market.
In addition, of course the producer has incentive to get production back and prices back down. When prices go up, demand go down. People will wait until they feel they can get deal for their hard drives. In the meantime the HDD companies have smaller inventories to work with, and therefore less income, even with the increased profit margin from a higher price. The decrease in volume goes for manufacturers and every middle-man involved. It is inaccurate to say just the consumer is getting screwed, everybody is. A worse situation, as plwww pointed out, is where an authority institutes price-fixing. With that, the demand would remain the same and inventories would quickly disappear, causing a true shortage. The higher price, on the other hand, means that people that need HDD can get them, but those that can wait will, well, wait.
Put succinctly, the "price jacking", although inconvenient, causes a more efficient allocation of resources for a smaller supply. Eventually, the supply will be up, meaning sellers will have more volume to sell. Competition will once again make the prices fall back down, making demand for the product increase until we see an equilibrium similar to that before the floods.
If we follow mavroxur's reasoning to its logical end, why would the prices for HDD be low in the first place, they could have been making a killing before this natural disaster. The reality is that this is merely market prices adjusting to a new equilibrium due to less supply.
[citation][nom]mavroxur[/nom]It's funny how there's not going to be a shortage in supplies, as manufacturers and vendors keep inventory on hand. And what incentive does anyone have for the manufacturing to resume quickly? Since there's now a "shortage", manufactuers can jack up their prices and make a killing. Now, resellers can jack their prices up even more, and who gets screwed? The consumer. They'll drag out production delays as long as possible until the cash cow is milked dry first.[/citation]
please read the article more carefully:
There is a real supply problem in the HDD market.
In addition, of course the producer has incentive to get production back and prices back down. When prices go up, demand go down. People will wait until they feel they can get deal for their hard drives. In the meantime the HDD companies have smaller inventories to work with, and therefore less income, even with the increased profit margin from a higher price. The decrease in volume goes for manufacturers and every middle-man involved. It is inaccurate to say just the consumer is getting screwed, everybody is. A worse situation, as plwww pointed out, is where an authority institutes price-fixing. With that, the demand would remain the same and inventories would quickly disappear, causing a true shortage. The higher price, on the other hand, means that people that need HDD can get them, but those that can wait will, well, wait.
Put succinctly, the "price jacking", although inconvenient, causes a more efficient allocation of resources for a smaller supply. Eventually, the supply will be up, meaning sellers will have more volume to sell. Competition will once again make the prices fall back down, making demand for the product increase until we see an equilibrium similar to that before the floods.
If we follow mavroxur's reasoning to its logical end, why would the prices for HDD be low in the first place, they could have been making a killing before this natural disaster. The reality is that this is merely market prices adjusting to a new equilibrium due to less supply.
Newegg is also limiting customers to 1 HDD of each model. That didn't stop me from buying 4 for my RAID array, I just can't have 4 of the same kind. Thank goodness Linux fake-RAID couldn't care less what model/size/etc... the hard drives are.
livebriand
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Morons. Did you ever think of the risk of that?
Benefits of outsourcing: More profit
Downsides: Fewer jobs in the US, where we need them. We're helping China even though we're sorta in a cold war with them.
Benefits of outsourcing: More profit
Downsides: Fewer jobs in the US, where we need them. We're helping China even though we're sorta in a cold war with them.
xxsk8er101xx
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Quarter = 3 months
several quarters = ~4-7 quarterse
4*3 = 12 months or 1 year.
It's going to take 1-2 years for the prices to go back to normal.
several quarters = ~4-7 quarterse
4*3 = 12 months or 1 year.
It's going to take 1-2 years for the prices to go back to normal.
Bartendalot
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[citation][nom]BlackHawk91[/nom]Hopefully they will learn from this unfortunate natural disaster and be prepared for the next rainy season.[/citation]
Wow, that is about as asinine a statement as I've seen. Should they prepare for catastrophic flooding like we did for Katrina? Or how the Japanese did at Fukushima?
This flooding is destroying millions of lives in 3 SE Asian countries (so far, Vietnam, Thailand and Cambodia) but you are right, they better prepare better next rainy season so your hard drive doesn't go up by $30.
Don't take nature for granted. It is more powerful than any of us can plan for.
Wow, that is about as asinine a statement as I've seen. Should they prepare for catastrophic flooding like we did for Katrina? Or how the Japanese did at Fukushima?
This flooding is destroying millions of lives in 3 SE Asian countries (so far, Vietnam, Thailand and Cambodia) but you are right, they better prepare better next rainy season so your hard drive doesn't go up by $30.
Don't take nature for granted. It is more powerful than any of us can plan for.
JohnnyLucky
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Bartendalot: How about building a few factories in America for redundancy, whilst at the same time feeling sorry for the Thai's that they're all wet? Does that plan ahead without being asinine?
discboy321
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cyberkuberiah
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eddieroolz
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the flood victims and works won't see the extra money!! this is just robbery... well they can fudge themselfs I wont pay 2x the price!
motherboards are also made in same country WTH?
motherboards are also made in same country WTH?
mavroxur
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- Feb 8, 2009
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Unfortunately, with a factory here in the US building hard drives, the 50% increase they're estimating due to the overseas supply problems will pale in comparison to the increase in price you'd see with domestically manufactured drives. It's hard to pay an American $1/day and expect them to work longer than 5 minutes.
nezzymighty
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My heart goes to all Thailand residents. I feel bad for their economy, as it will suffer as well, which will reflect in the hardships of the lives of their employees, and their quality of living. I hope that they can turn around quickly, and recover their losses both on a personal and economical level (as these go hand in hand).
Folks, water damage is one of the worst kind of disasters from which to recover. Any engineer will agree with you. How long did it take New Orleans to recover after Katrina?
What will most likely happen, as has happened in the petroleum industry, is the cost of the product will increase to an all new level. This will become an accepted new cost structure for the commodity due to the projected time frame it will take to recover/resume production, and bring inventory upto required demand levels. As the quarters to years pass, and the cost is still inflated, and the hard drive manufacturers are making double their return on the investment, you will just accept this new cost structure as the cost of the product because it has been at that level for years. Why would they reduce their new level of returns and margins on their products when you're going to purchase it regardless. It is the information age, where space requirements grow exponentially year over year. HDDs are becoming commodoties, like gas, that people will purchase because they'll have that need (not want).
Here is another thing to think about: If WD is mostly affected by this disaster, you would assume that WD drives will have the greatest impact in cost elevation. Well, what about Seagate, if they are less impacted by the disaster, does that mean that their drives are only slightly going to increase in cost vs. WD ($/GB)? I don't think so. I believe Seagate will capitalize on the disaster, take the increase in return at WD's expense. WD will set a new $/GB cost structure for their drives, and even if Seagate is less impacted, they'll keep their products in line with what WD increased their cost. This, as everyone knows, means more profits in the end for Seagate. This is not "evil", this is business. This is how the economic engine of the world works.
And so I'm concluding that more than likely, you won't see the kind of prices we've enjoyed on HDDs for a long time (many years) to come.
Folks, water damage is one of the worst kind of disasters from which to recover. Any engineer will agree with you. How long did it take New Orleans to recover after Katrina?
What will most likely happen, as has happened in the petroleum industry, is the cost of the product will increase to an all new level. This will become an accepted new cost structure for the commodity due to the projected time frame it will take to recover/resume production, and bring inventory upto required demand levels. As the quarters to years pass, and the cost is still inflated, and the hard drive manufacturers are making double their return on the investment, you will just accept this new cost structure as the cost of the product because it has been at that level for years. Why would they reduce their new level of returns and margins on their products when you're going to purchase it regardless. It is the information age, where space requirements grow exponentially year over year. HDDs are becoming commodoties, like gas, that people will purchase because they'll have that need (not want).
Here is another thing to think about: If WD is mostly affected by this disaster, you would assume that WD drives will have the greatest impact in cost elevation. Well, what about Seagate, if they are less impacted by the disaster, does that mean that their drives are only slightly going to increase in cost vs. WD ($/GB)? I don't think so. I believe Seagate will capitalize on the disaster, take the increase in return at WD's expense. WD will set a new $/GB cost structure for their drives, and even if Seagate is less impacted, they'll keep their products in line with what WD increased their cost. This, as everyone knows, means more profits in the end for Seagate. This is not "evil", this is business. This is how the economic engine of the world works.
And so I'm concluding that more than likely, you won't see the kind of prices we've enjoyed on HDDs for a long time (many years) to come.
puddleglum
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- Dec 3, 2008
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[citation][nom]mavroxur[/nom]Unfortunately, with a factory here in the US building hard drives, the 50% increase they're estimating due to the overseas supply problems will pale in comparison to the increase in price you'd see with domestically manufactured drives. It's hard to pay an American $1/day and expect them to work longer than 5 minutes.[/citation]
Who said anything about U.S. workers -- there's plenty of imigrant labor in the country.
Who said anything about U.S. workers -- there's plenty of imigrant labor in the country.
All the stock in the channel is already gone. The distributors are holding what little stock they have left for system builders.
The missing part of this story is that the company that makes almost all the hard drive motors, Nidec, was also flooded which means everyone is in big trouble since it affects more than 70% of the hard drives. Now Nidec has stated that it will try to restart today but who knows if that will work... they are also trying to make them in the Phillipines and China but it will certainly take a while to refit and ramp up production.
The missing part of this story is that the company that makes almost all the hard drive motors, Nidec, was also flooded which means everyone is in big trouble since it affects more than 70% of the hard drives. Now Nidec has stated that it will try to restart today but who knows if that will work... they are also trying to make them in the Phillipines and China but it will certainly take a while to refit and ramp up production.
someoneelse
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- Feb 20, 2009
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damn it!
HDD had just got to the point where they were cheaper (and more convenient) than dvd for storage.
I have also just realised how self centered I am because I have only just started caring that there were floods in thailand.
I don't mean to be rude but if I had REALLY expensive manufacturing equipment I like to think I would have thought about putting it Above any flood level.
HDD had just got to the point where they were cheaper (and more convenient) than dvd for storage.
I have also just realised how self centered I am because I have only just started caring that there were floods in thailand.
I don't mean to be rude but if I had REALLY expensive manufacturing equipment I like to think I would have thought about putting it Above any flood level.
I've had a Samsung Spinpoint F3 1TB for some time now, just went on a site where it used to be £45 and now it's around £72 - I was like "wtf? =O".
Went in search of what the deal was, found this article. Guess I won't be having a new HDD in a while unless I go ahead and get a cheap 60GB SSD.
Went in search of what the deal was, found this article. Guess I won't be having a new HDD in a while unless I go ahead and get a cheap 60GB SSD.
oh well
I was just going to build a 36 disk media server and use Seagate 3tb xt's
I did buy 1 last week to test @ $140 it works great but now the cost is $300 so I guess this project will be on hold
you can be assured that the prices will remain @ these levels or higher for 1 yr +
and as they rebuild the factories cutting corners all the way the quality will fall
just a note of nostalgia when I sold computers in the late 80's 1gb storage was $25,000
I was just going to build a 36 disk media server and use Seagate 3tb xt's
I did buy 1 last week to test @ $140 it works great but now the cost is $300 so I guess this project will be on hold
you can be assured that the prices will remain @ these levels or higher for 1 yr +
and as they rebuild the factories cutting corners all the way the quality will fall
just a note of nostalgia when I sold computers in the late 80's 1gb storage was $25,000
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