Hard drive prices (and innovation) decline

Summary:The price hikes from the Thailand flooding in late 2011 are fading fast. So are increases in drive areal density. Is stagnation the new normal?

Hard drive price watching firm PriceG2 — through Storage Newsletter — reported that hard drive prices declined 5 percent in the first quarter of 2013. While good news for consumers, expect to see even steeper declines this quarter.

Why? Because an accelerating sales decline in PCs is meeting a rising tide of disk drive production.

The bad news? Vendors can afford to do this because they're cutting back on hard drive innovation.

There are two reasons for this. First, hard drives capacities have outstripped the needs of most consumers and system builders. Second, vendors have decided it isn't worth investing heavily in the technology required for areal density increases.

Yes, hard drives will continue to get cheaper, but at a slower rate. Say goodbye to the 40 percent annual increases in areal density and drive capacity that we got used to in the first decade of the 21st century.

The Storage Bits take  

As I noted last fall ,"... with PC sales declining and the threat of SSDs, drive vendors can't afford to get greedy on pricing". They got a welcome burst of profitability thanks to the floods, but that was a one time event.

Your best deals in hard drives are external hard drives (preferably with a USB 3.0 interface) rather than raw drives. I'd love to know how they compute internal transfer pricing to make external drives cheaper than internal drives, but I guess that's for finance people to know and the rest of us to wonder at.

If you have a choice, I would wait another three months before buying any 4 terabyte drives. It usually takes 3 to 6 months for a new drive capacity to get the production bugs out, yields up, and marginal costs down.

Today, the sweet spot is in the 2 to 3 TB drives. Yet 4 terabyte drives are also coming down in price as availability improves, and should hit the sub-3¢/GB level by the second half of 2013.

You can also expect to see Western Digital and Toshiba follow Seagate's lead into hybrid drives. There is substantial room for performance improvements and creative engineering to make hybrid drives higher-margin.

Comments welcome, as always. Find any good deals lately?

Topics: Storage, Hardware

About

Harris has been working with computers for over 35 years and selling and marketing data storage for over 30 in companies large and small. He introduced a couple of multi-billion dollar storage products (DLT, the first Fibre Channel array) to market, as well as a many smaller ones. Earlier he spent 10 years marketing servers and networks.... Full Bio

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