HDD Warranties Slashed By More Than Half - But Why?
Subject: Storage | December 30, 2011 - 09:45 AM | Allyn Malventano
Tagged: western digital, wdc, Warranty, Seagate, hitachi, hdd
It's been a few short months since Thailand saw some serious flood damage. The flooding had a huge impact on everything from Automobile production to the making of fiber optic cables. The largest impact to the computer industry was that of storage devices. While flash memory fabs were spared, makers of HDD components were hit hard.
Hitachi plant in Thailand, partially submerged.
This effect quickly trickled down to the HDD quickly spiking prices by nearly 200% by Halloween. Inventories remained at critically low levels for a 60-day window - long enough to have far reaching impact on the PC industry as a whole. With a key component missing from PC production chains, the effects caused dips in demand from the PC suppliers, eventually trickling back up the chain to other component makers. Intel was forced to scale back their chip production. The industry finally saw a reprieve just a few weeks ago, as HDD production recovered sufficiently as to begin the slow replenishment process, and it started to look like everything would be ok.
...and then the other shoe dropped.
Right as HDD Suppliers started catching up on supply, Western Digital made a surprising announcement. Starting on January 2nd of next year, most of their drive lines will see a drastic reduction to warranty periods. Caviar Blue, Caviar Green, and Scorpio Blue drives see a 50% drop from 3 to 2 years. Seagate quickly jumped on the bandwagon, cutting the 5-year warranties of several of their lines down to three. Even worse, the Baracuda, Baracuda Green, and Momentus (laptop) drives will be cut from five all the way down to 1-year warranties. Seagate's reductions go into effect December 31, 2011.
The Momentus XT, while technically a Hybrid SSD/HDD, was not spared in the warranty cuts.
This isn't the first time warranties saw an across-the-board cut in duration. Back in 2002, Western Digital and Seagate (as well as Maxtor - since acquired by Seagate), jointly cut their warranties back to just one year. The reasoning back then was claimed to be strictly business, and that it was done to be in-line with the 1-year warranty provided by PC OEM's, but was that the only reason? We would need a bunch of data on HDD failure rates to know for sure...
Fast forward to 2007, where Google did just that. They published an excellent study titled 'Failure Trends in a Large Disk Drive Population'. This study incorporated a huge number Hard Drives (over 100,000!), with the data set ranging from 2001 to 2006. While the study is a great read and contains a plethora of useful data, there is an important tidbit relevant to the subject of Warranty Service:
Once you get past 'infant mortality', HDD's tend to fail at a rate of between 1-2% up to the 1-year point, but that rate quickly spikes to 8-9% per year, starting at the 2-year point. Now don't go thinking this is some sort of failure-by-design conspiracy, because it's not. It's just the nature of the beast. The issue is that a Hard Disk Drive is essentially the PC-equivalent of a record player. PC's are mostly solid state devices - not much moves around in there, but the things that do simply won't last very long. There was a brief spat of older motherboards prematurely failing due to bad capacitors (interesting story at that link, BTW), but modern boards use 'solid caps' and have mostly licked that problem.
Fans get gunked up by dust and fail, as do optical drives, and while HDD's are dust-tight, there is other stuff that simply cannot last indefinitely. The head pack pivots on a bearing with grease that hardens over time. The disk pack is mounted on a fluid dynamic bearing that not only sees metal to metal contact each time the drive is spun down and back up, but the fluid will eventually dissipate, resulting in bearing failure. The more common failure mode is caused by head crashes, where out of the billions of times the heads are accelerated for seeks (stressed by thousands of g's), it must do so while floating mere nanometers above the spinning platter, and it takes just a few skips off of the surface to cause a given head to permanently fail.
So with that out of the way, let's theorize as to why the warranty periods have dropped yet again:
1. Marketing: First is the sort of 'megapixel race' that HDD manufacturers intermittently engage in. Warranty periods climb higher as manufacturers began using it as a means to make their models appear more reliable than the competition. One brand would jump up to 3 years, then others would follow. Rinse and repeat for the jump to 5-year warranties. The race would be occasionally tempered by a reality check and subsequent drop, such as this drop back down to 3 just a few years later (December, 2008). The reality here is that HDD Warranty periods are on a market driven cycle, and this is nothing more than a lower-than-normal dip, most likely due to the Thailand flooding combined with a spike in warranty return requests.
2. Coupons: Warranty returns are like coupons to a certain degree, in that a number of users will sooner buy a newer and larger drive than spend the time dealing with a return. Spike prices up a bit and those same users now have more of an incentive to cash in on the 5-year warranty of those failed drives they have lying around. Combine this with increased pressure from the slow but steady decline in flash memory prices, and you end up with HDD manufacturers striving to push more of their bottom line over to Research and Development. In this case, the first things to go were those long warranty periods - which were a bit over-inflated in the first place.
So there you have it. We're on nothing more than a steeper than normal dip in the HDD warranty cycle. In a few years, Hard Drive manufacturers will be forced to ramp those warranty periods right back up to 5-years. The reason this time around? Pending heavy competition from the SSD sector - and most of those carry 5-year warranties.