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DRosencraft – “The alternative is that Seagate drops it prices to where they probably should be, and WD dies as a company from being unable to match Seagate's price.” Ok? So if you really think that and think you understand how the market works then why wouldn’t they do that? All companies dislike competition, they don’t want it period. So if this was really in the cards for them, they would have done it. Once WD died or went bankrupt they would just swoop in and buy up their equipment for pennies on the dollar and control a huge market share. But what really happened is with the actual inflation of prices they used the extra money they had coming in, WD and Seagate and bought up a few competitors to increase their market share.
You are also forgetting the fact that WD and other manufacturers had tons of HDD’s in stock. They had plenty enough in reserve to cover them until they got production back up and running. In actuality, there was 0 reason to raise prices. Well other than the huge profits of course. It was a manufactured shortage. As in it was non-existent. Look how the koch brothers manipulated the oil market with leaving tankers off the coast until the prices were right. When one company does it they all start doing it, either blatant collusion or just noticing what your competitors are doing and copy them.
You are also forgetting the fact that WD and other manufacturers had tons of HDD’s in stock. They had plenty enough in reserve to cover them until they got production back up and running. In actuality, there was 0 reason to raise prices. Well other than the huge profits of course. It was a manufactured shortage. As in it was non-existent. Look how the koch brothers manipulated the oil market with leaving tankers off the coast until the prices were right. When one company does it they all start doing it, either blatant collusion or just noticing what your competitors are doing and copy them.
If hard drive manufacturers are running a cartel and exploiting the market, why not start your own manufacturing company? It isn't even out of the park, because if you can get costs below what the cartel is charging investors would line up behind you. Or someone else would have done it. No new mechanical drive manufacturers opened up - all that happened was ssd market share went up a truck load.
thezooloomaster
Honorable
- Apr 19, 2012
- 78
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Lol at "Taiwan". If Formosa had seen devastating floods, it's the whole PC market that would have seen prices spike severely, forget HDDs.
[citation][nom]joex444[/nom]Another example of how unemployment is still sky high because companies are saying they can't afford to hire people. Yet they report record profits, which I think is the definition of being "able to hire."[/citation]
The main reason why companies aren't hiring is because they don't need to. The recession forced many of them to improve cost-efficiency of their labor or join the bankruptcy club.
Why hire more when your current workforce is sufficient?...
The main reason why companies aren't hiring is because they don't need to. The recession forced many of them to improve cost-efficiency of their labor or join the bankruptcy club.
Why hire more when your current workforce is sufficient?...
[citation][nom]freggo[/nom]Artificial? Did they MAKE the floods ?[/citation]
No but they had a lot of prior stock on hand, they were making hard drives well beyond the rate they were able to sell them and had substantial stocks on hand when the floods hit. They could have easily used up those stocks to bridge the gap with out the price increase. They purposely held back shipments or cut them when they had supply. Thus artificial scarcity. The floods was just a nice excuse to bump up the prices.
No but they had a lot of prior stock on hand, they were making hard drives well beyond the rate they were able to sell them and had substantial stocks on hand when the floods hit. They could have easily used up those stocks to bridge the gap with out the price increase. They purposely held back shipments or cut them when they had supply. Thus artificial scarcity. The floods was just a nice excuse to bump up the prices.
DRosencraft
Distinguished
- Aug 26, 2011
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[citation][nom]lxlqlxl[/nom]DRosencraft – “The alternative is that Seagate drops it prices to where they probably should be, and WD dies as a company from being unable to match Seagate's price.” Ok? So if you really think that and think you understand how the market works then why wouldn’t they do that? All companies dislike competition, they don’t want it period. So if this was really in the cards for them, they would have done it. Once WD died or went bankrupt they would just swoop in and buy up their equipment for pennies on the dollar and control a huge market share. But what really happened is with the actual inflation of prices they used the extra money they had coming in, WD and Seagate and bought up a few competitors to increase their market share.You are also forgetting the fact that WD and other manufacturers had tons of HDD’s in stock. They had plenty enough in reserve to cover them until they got production back up and running. In actuality, there was 0 reason to raise prices. Well other than the huge profits of course. It was a manufactured shortage. As in it was non-existent. Look how the koch brothers manipulated the oil market with leaving tankers off the coast until the prices were right. When one company does it they all start doing it, either blatant collusion or just noticing what your competitors are doing and copy them.[/citation]
First, their stock of drives sitting in storage was not all that huge to begin with. Considering how much production WD lost, any extra supply they had likely went out the window in a few weeks, Seagates a little while after that. Prices didn't jump immediately, it took a few weeks after the first flooding and factory shutdowns were reported.
As for why Seagate doesn't just drop their prices to shut WD out of the market, there's several reasons for that. As I mentioned, they have filled a lot of the void from WD's loss, but there's no way they can actually replace WD's entire manufacturing capavility. Even if they wanted to, the chances of them being able to change what is essentially a duopoly right now into a pure monopoly is slim considering the regulations internationally. Seagate is likely well aware of both of these facts, so they aren't likely to put themselves in that sort of situation right now. If they want to really crush WD and take them out of the market, tehy'd want to make sure they don't act too soon and put themselves in a spot where they find themselves under a mountain of lawsuits. You have to remember, you can get hit for price fixing to the upside (charging too much) but price fixing to the down side (undercutting competition) is also a crime. Google, if my memory is right, got hit over Google Maps in Europe because it was offering it for free while competitors in map programs were charging for it.
First, their stock of drives sitting in storage was not all that huge to begin with. Considering how much production WD lost, any extra supply they had likely went out the window in a few weeks, Seagates a little while after that. Prices didn't jump immediately, it took a few weeks after the first flooding and factory shutdowns were reported.
As for why Seagate doesn't just drop their prices to shut WD out of the market, there's several reasons for that. As I mentioned, they have filled a lot of the void from WD's loss, but there's no way they can actually replace WD's entire manufacturing capavility. Even if they wanted to, the chances of them being able to change what is essentially a duopoly right now into a pure monopoly is slim considering the regulations internationally. Seagate is likely well aware of both of these facts, so they aren't likely to put themselves in that sort of situation right now. If they want to really crush WD and take them out of the market, tehy'd want to make sure they don't act too soon and put themselves in a spot where they find themselves under a mountain of lawsuits. You have to remember, you can get hit for price fixing to the upside (charging too much) but price fixing to the down side (undercutting competition) is also a crime. Google, if my memory is right, got hit over Google Maps in Europe because it was offering it for free while competitors in map programs were charging for it.
I haven't bought any hard-drive since the flood and i probably won't buy another hard-drive until mid 2013 because they are too expensive (3 times the price of what we used to pay for).
Given the high risk of flooding in Thailand, these companies did not even delocalize their production or try to minimize the financial risks of another hard-drive shortage; their intention is unfortunately not naive and rather harmless, it's like they are hoping to get another flood over there.
Given the high risk of flooding in Thailand, these companies did not even delocalize their production or try to minimize the financial risks of another hard-drive shortage; their intention is unfortunately not naive and rather harmless, it's like they are hoping to get another flood over there.
[citation][nom]stevenrix[/nom]I haven't bought any hard-drive since the flood and i probably won't buy another hard-drive until mid 2013 because they are too expensive (3 times the price of what we used to pay for). Given the high risk of flooding in Thailand, these companies did not even delocalize their production or try to minimize the financial risks of another hard-drive shortage; their intention is unfortunately not naive and rather harmless, it's like they are hoping to get another flood over there.[/citation]
In the world of markets it gives them volatility, which is uncertainty and they can bank on that. Keeping prices high being the primary goal. For as much money as they put into those factories spending a few million to make the factory essentially flood proof would be no sweat off their backs but they don't. Yes I understand if the flood waters stay they wont be able to ship anything out, but at least they wont lose that capacity for months until it is back up and running. So why don't they do this and why do they want the prices high? Well it all boils down to margins. They were making money before just not a lot. Add to that SSD's coming on the scene and they need a way to make more money. Money that they should have used for r&d or investing in better factories or locations, but no it was pocketed and or used to buy up competitors.
As for not buying any more hard drives? Well I have held off as long as I could and I really need to get another drive soon. Likely within the next few weeks to a month. A drive I paid around 80 bucks for before the flood now is around 120. A few days after the flood hit and a while later it jumped up to around 280.
As for DRosencraft's response, about not being a lot of stock. From everything I have read about the situation they had warehouses full of stock. Easily enough to cover 50% of the orders for a year. They were building them hand over fist and stock piling them. Put it this way, during the high prices. I had a few clients buy drives when they absolutely had to. From different manufacturers. Be it a month after the flood at the peak of the prices til a while late when they started to drop. The manufacture date was months before the flood hit. I bet a few drives if you buy them right now you have a decent chance to get one that was manufactured before the flood. So, lack of supply is extremely doubtful. If you believe everything a corporation says, I have a nice bridge for sale. A corporations only purpose is to make a profit. Not for your or my well being. They will screw you over any chance they get and that flood was simply an excuse to put a likely pre determined plan into action. I'd put money on it they were planning on it to happen at some point. No they didn't make the floods happen but looking at historical data they could be sure a flood would happen at some time and if they had enough stock built up they could capitalize on it.
In the world of markets it gives them volatility, which is uncertainty and they can bank on that. Keeping prices high being the primary goal. For as much money as they put into those factories spending a few million to make the factory essentially flood proof would be no sweat off their backs but they don't. Yes I understand if the flood waters stay they wont be able to ship anything out, but at least they wont lose that capacity for months until it is back up and running. So why don't they do this and why do they want the prices high? Well it all boils down to margins. They were making money before just not a lot. Add to that SSD's coming on the scene and they need a way to make more money. Money that they should have used for r&d or investing in better factories or locations, but no it was pocketed and or used to buy up competitors.
As for not buying any more hard drives? Well I have held off as long as I could and I really need to get another drive soon. Likely within the next few weeks to a month. A drive I paid around 80 bucks for before the flood now is around 120. A few days after the flood hit and a while later it jumped up to around 280.
As for DRosencraft's response, about not being a lot of stock. From everything I have read about the situation they had warehouses full of stock. Easily enough to cover 50% of the orders for a year. They were building them hand over fist and stock piling them. Put it this way, during the high prices. I had a few clients buy drives when they absolutely had to. From different manufacturers. Be it a month after the flood at the peak of the prices til a while late when they started to drop. The manufacture date was months before the flood hit. I bet a few drives if you buy them right now you have a decent chance to get one that was manufactured before the flood. So, lack of supply is extremely doubtful. If you believe everything a corporation says, I have a nice bridge for sale. A corporations only purpose is to make a profit. Not for your or my well being. They will screw you over any chance they get and that flood was simply an excuse to put a likely pre determined plan into action. I'd put money on it they were planning on it to happen at some point. No they didn't make the floods happen but looking at historical data they could be sure a flood would happen at some time and if they had enough stock built up they could capitalize on it.
livebriand
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- Apr 18, 2011
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Marco925
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[citation][nom]greghome[/nom]What's happening to Toms?.....................The flood was not in Taiwan......it was in Thailand@Douglas Perry, As an author of a "professional techsite" get your facts right........[/citation]
It gets worse! Tom's should KNOW taiwan, they go annually to computex!
It gets worse! Tom's should KNOW taiwan, they go annually to computex!
jerreddredd
Distinguished
- Mar 22, 2010
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those HDD plants were pumped out and retooled within 60 days. the stock and equipment on hand was a total loss, but trashed the on hand stuff and bought in all new equipment from Japan and the US (some form China). they were back up running in less than 90 days.
I also have a question: If there wasn't the WD/Seagate cartel, and a third US-based company was intact from the floods and kept their prices low, what would WD/Seagate do? They would raise prices anyways because they couldn't do anything else, or they would work their ass to solve the problem ASAP so as to go back to business as usual?
Highly increased profits show only one thing: Seagate and WD used the floods and their huge market share, in order to fix the prices for a long period of time. And no-one didn't cared to investigate on US or EU...
Highly increased profits show only one thing: Seagate and WD used the floods and their huge market share, in order to fix the prices for a long period of time. And no-one didn't cared to investigate on US or EU...
The_Trutherizer
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- Jul 21, 2008
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Far be it for me to tell these people how to run their business, but they really are going to alienate their clientele if they don't deal fairly. And if production is really exceeding pre-flood levels then they are just creating a situation where supply will far exceed demand and be forced to sell drives at record lows. Not to mention that many companies are getting in on the SSD market and these drives are becoming serious value contenders now. But then maybe these high prices we are experiencing is more a reaction to SDDs becoming competitive rather than the weak flood excuse.
Well I'll certainly not buy a new HD until I see value for my money. They can go screw themselves.
Well I'll certainly not buy a new HD until I see value for my money. They can go screw themselves.
sayantan
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- Dec 9, 2009
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[citation][nom]DRosencraft[/nom]It should be noted that it was WD whose plants were hard hit by the floods, not Seagate or the others. WD was the one that had a relatively high concentration of plants in that area. Seagate's claim at the time, which is partly backed up by these numbers, is that demand on their side went up since WD could no longer fill the aggregate volume for HDDs. This is where the whole price-fixing conspiracy theory comes from. WD raised prices after the floods because they lost manufacturing capacity and needed to dissuade high volume purchasing just so they wouldn't themselves run out. Seagate, who lost little to no manufacturing capacity, raised prices to also dissuade high volume purchasing as they tried to fill in the slack left by WD. They ramped up their own production to take advantage. At this point you wont see Seagate's prices drop until WD's prices drop. It actually makes a lot of sense for us as consumers to endure it this way. The alternative is that Seagate drops it prices to where they probably should be, and WD dies as a company from being unable to match Seagate's price. Don't pay too much attention to Seagate's numbers. Look at the overall total quarterly shipments of HDDs, and the average price. But, no one is probably going to listen to me, or do the investigating themselves, so I'll probably get down voted to oblivion for "defending" Seagate ad WD. Oh well.[/citation]
I liked your theory but I couldn't understand this part. If seagate also increased its prices along with WD despite of not being much affected by the flood then how the hell demand for HDDs are up from same quarter previous year. Is it that the customers are willing to pay whatever the suppliers charge them with? It is not their pricing alone which brought their increase in profits but also an increse in demand.
I liked your theory but I couldn't understand this part. If seagate also increased its prices along with WD despite of not being much affected by the flood then how the hell demand for HDDs are up from same quarter previous year. Is it that the customers are willing to pay whatever the suppliers charge them with? It is not their pricing alone which brought their increase in profits but also an increse in demand.
kinggremlin
Distinguished
- Jul 14, 2009
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Some of you people here really have no idea how things work or no ability to see facts right in front of your face. Everything is a conspiracy targetted directly at you because you are so important that these multinational companies are forming their business strategies with you as the center focus.
In Q2, which ended in December for WD, WD saw a 50% decrease in hard drive shipments from the quarter before. They went from 58million in Q1 to 29 million in Q2. They also saw a 26% decrease in revenue. But you people all know better, the floods were all made up and had no effect on the hard drive makers. None at all, just a conspiracy. 29 million fewer hd's shipped. So that must mean Seagate saw a huge surge in shipments the same quarter. Not exactly. They saw a drop of 4 million from 51 to 47 million units shipped. They didn't have any plants flooded like WD, but they were still effected by parts suppliers getting flooded.
Clearly, WD can't fill the demand they are receiving with that large a drop in production, so they have to raise prices to reduce demand. So, now, Seagate who has also seen a slight drop in production can't pick up the slack for WD, so they raise prices as well in response.
Now, this is where most of you think you are so much more important than you really are. When these companies raise prices on drives, they are not raising the MSRP for drives being sold at Best Buy or Newegg. They are raising prices on huge bulk orders. It is estimated that Google has around 1 million servers with 2 drives a piece in them. That's a minimum of 2 million hard drives for 1 company. Companies like Time Warner, Yahoo, IBM, all of these companies buying 10's of thousands of drives at a time. Just think about all the companies moving towards cloud based applications. These all take huge amounts of storage. The goal of raising prices is reduce the demand for business critical applications(cloud computing) so that they can fulfill the demand for the more important mission critical applications.
You think Seagate or WD gives a sh*t in the slightest about you, who is putting off the purchase of 1 or 2 drives for a year because you don't like the prices when they are struggling to fill orders for 1000's of drives? The reason retail drive prices have gone up is just a trickle down effect. When the price of huge bulk orders goes up, you can't charge significantly less for drives in the retail market. That creates a paradox in the market that needs to be fixed.
Guess what? If company "X" is willing to pay "Y" dollars for 20,000 drives to keep the business growing. Then neither WD or Seagate is going to care if you don't want to pay "Y" dollars for one drive. You are totally meaningless to them.
In Q2, which ended in December for WD, WD saw a 50% decrease in hard drive shipments from the quarter before. They went from 58million in Q1 to 29 million in Q2. They also saw a 26% decrease in revenue. But you people all know better, the floods were all made up and had no effect on the hard drive makers. None at all, just a conspiracy. 29 million fewer hd's shipped. So that must mean Seagate saw a huge surge in shipments the same quarter. Not exactly. They saw a drop of 4 million from 51 to 47 million units shipped. They didn't have any plants flooded like WD, but they were still effected by parts suppliers getting flooded.
Clearly, WD can't fill the demand they are receiving with that large a drop in production, so they have to raise prices to reduce demand. So, now, Seagate who has also seen a slight drop in production can't pick up the slack for WD, so they raise prices as well in response.
Now, this is where most of you think you are so much more important than you really are. When these companies raise prices on drives, they are not raising the MSRP for drives being sold at Best Buy or Newegg. They are raising prices on huge bulk orders. It is estimated that Google has around 1 million servers with 2 drives a piece in them. That's a minimum of 2 million hard drives for 1 company. Companies like Time Warner, Yahoo, IBM, all of these companies buying 10's of thousands of drives at a time. Just think about all the companies moving towards cloud based applications. These all take huge amounts of storage. The goal of raising prices is reduce the demand for business critical applications(cloud computing) so that they can fulfill the demand for the more important mission critical applications.
You think Seagate or WD gives a sh*t in the slightest about you, who is putting off the purchase of 1 or 2 drives for a year because you don't like the prices when they are struggling to fill orders for 1000's of drives? The reason retail drive prices have gone up is just a trickle down effect. When the price of huge bulk orders goes up, you can't charge significantly less for drives in the retail market. That creates a paradox in the market that needs to be fixed.
Guess what? If company "X" is willing to pay "Y" dollars for 20,000 drives to keep the business growing. Then neither WD or Seagate is going to care if you don't want to pay "Y" dollars for one drive. You are totally meaningless to them.
delicious fiction
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- Jul 3, 2012
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Too bad they wont be seeing any of my money for awhile the last 2 seagate drives I bought both crashed..Moving on..
I really wish seagate would look at everyone else doing SSD-caching and realize the performance bonus starts at 32GB. I can get that the first hybrid drive was proof of concept, but the second... really? They made money, and they have a technology in place that can make them more, throw the resources to make it work.
legacy7955
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- May 16, 2011
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Forget the "gravy train", the trend with executives today is to make it the
"GREEDY TRAIN".
Considering how poor the US economy is and how consumers are very cash strapped it seems insane that they are all quickly raising prices in EVERY business sector, soon enough the prices will be so high that almost NOBODY will be buying anything except for the uber rich and a few of their lackys.
"GREEDY TRAIN".
Considering how poor the US economy is and how consumers are very cash strapped it seems insane that they are all quickly raising prices in EVERY business sector, soon enough the prices will be so high that almost NOBODY will be buying anything except for the uber rich and a few of their lackys.
eddieroolz
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- Sep 6, 2008
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