SSD and HDD Price Analysis: End of Shortage In Sight?
Subject: Storage | December 18, 2011 - 11:20 AM | Ryan Shrout
Tagged: WD, thailand, ssd, Seagate, hdd, Hard Drive, flooding
The hard drive industry might be recovering more quickly than expected and the entire tech field should be hoping that is the case. We have been covering the unfortunate disaster in Thailand and the accompanying disruption in the world of storage since things first started hitting the fan in October. The initial result was a very dramatic price increase on traditional spinning disks - prices going up as much as 200% in some cases. This week we got our hands on some very interesting data from Dynamite Data, a company focused on channel monitoring, that they were willing to let us share with you.
First, the bad news that we already know about - the price increases we have seen percolate throughout the entire industry in the last two months.
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This graph shows the average price of the top 50 spinning disk drives over the last year in red and the very specific Western Digital Velociraptor 150GB pricing on Amazon.com in blue. You can see that around October 16th the big price increase began and over the entire ecommerce span that Dynamite Data monitors, prices on the top 50 HDDs went up by 42%. And while not shown in the graph, other provided data shows that at its peak the low-cost leaders in the HDD market increased their prices by 150% as of early December.
Why did this happen? Looking at inventory levels clearly shows the drop in availability.
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Based on those same top 50 SKUs, we saw ecommerce inventory drop by 90% in late October (in less than one week!) after the first impact on the supply chain that occurred on October 8th. What is interesting is that it took a week or more for the price changes to take place based on the analysis of the disaster in Thailand. Much to the dismay of many of the conspiracy theorists out there though this data definitely backs up the price increases from WD, Seagate and others.
There is an uplifting bit of news in both of the above the graphs though - look towards the end of the time lines of gathered data. Both show movement in the direction of consumer's interests: a jump in inventory and a drop in average pricing. WD announced on November 30th that the first of its production facilities was back online and we are already seeing results. Of course the CEO of Seagate is still claiming that it will take more than a year for the industry to recover but it looks like supply may increase at a quicker rate than initially expected.
Finally, just for a bit of added bonus coverage, many have wondered if the price increase on traditional spinning drives would affect the pricing of SSDs. Well, it looks like did at least for a 10 day span.
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Over the last year prices for solid state drives have dropped by 23% on the top 50 devices available with one minor hiccup. In a 10 day period between the end of October and early November, there was an SSD price increase that isn't explainable by any kind of inventory changes or supply line changes. This was likely due to the HDD shortage and vendors looking to maximize profits when consumers didn't have access to the low cost hard drives they were used to. But because the price increase lasted such a short time I think we can clearly see that customers didn't fall for the ploy and the hiccup was quickly self-corrected.
Even though we have been monitoring prices on our own since the Thailand disaster first occurred, it is great to get some hard data to put alongside our presumptions. While there is tons of bad news still to digest for at least the first two quarters of 2012, the information provided by Dynamite Data provides some hope that the worst is behind us. If you are interested in more analysis of this data and you will be at CES in January, you should stop by the Storage Visions conference where there will be a short talk on the topic.