HDD Warranties Slashed By More Than Half - But Why?

Subject: Storage | December 30, 2011 - 09:45 AM |
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.

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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.

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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...

Continue reading our post about the lowered HDD warranties for more thoughts and analysis!!

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:

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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.

Source: The Register

December 30, 2011 | 10:55 AM - Posted by Mark (not verified)

Allyn this article is top notch and exactly what I look for in terms of thought provoking articles that easily debunk a conspiracy theory, especially when using a history lesson. I myself was very skeptical about the situation but it is such a side issue that I was not willing to do any research behind it.

I thank you, good analysis.

December 30, 2011 | 02:39 PM - Posted by elgrandeburro

Appreciate the analysis. By slashing warranties on traditional hard drives, and SSD's starting to slowly come down in price, it makes purchasing an SSD even more desirable. While price per GB and capacity of HDD's still have an advantage, if I had to chose between the two types of drives today, I would head for the SSD.

December 30, 2011 | 04:07 PM - Posted by Anonymous (not verified)

Glad here in Australia we have laws where the statutory warranty isn't decided by a corporation, it's by the general public/reasonable person. This means our warranties in these products hasn't changed :)

December 30, 2011 | 10:01 PM - Posted by Tracy Bolte (not verified)

In the article you note that Maxtor was acquired by WD, but in fact was purchased by Seagate.

December 31, 2011 | 04:27 PM - Posted by JSL

I came here to comment on that too, beat me too it.

January 4, 2012 | 09:39 PM - Posted by Allyn Malventano

Thanks for the catch, guys. Got my companies jumbled up in the mix, there.

January 1, 2012 | 03:14 AM - Posted by Dr_b_ (not verified)

Really need to correct the fact that is was Seagate that bought Maxtor, not WD, as a couple of others have stated.

Also there was one other thing missing from the google study released to the public -- the name of the manufacturer, or data broken down by manufacturer.

Didn't read the entire thing when it came out, but it would be interesting to have the data broken down by which brands experienced the failures, and if there was any statistical significance between failure rates between brands @ google.

Either way that information would be extremely important to know, that certain brands break more than others, or it doesn't really matter which manufacturer makes them. My guess is that with a large enough sample size over a long period of time, there is no difference.

January 4, 2012 | 09:44 PM - Posted by Allyn Malventano

I couldn't rely on the Google study data to determine which ones fail more or less, mainly because of my own experience and observations during that same period. For example, there were some particular models very well known for failure back then, and those failures were due to a flawed design. Those models are now long gone, and trying to make such a suggestion in a 'current' editorial would be reckless without some hard data (and a crystal ball).

Also, I was more going for your latter statement, in that it truly doesn't matter who makes them, especially since these warranty cuts are happening industry-wide.

August 1, 2013 | 01:15 AM - Posted by niraj kumar gupta (not verified)

samsung 500GB hdd not working on warrenty...

February 17, 2014 | 01:49 PM - Posted by Frédéric L. W. Meunier (not verified)

In the last 12 years, I only bought two drives. Both ran 24 hours a day and surpassed 50.000 hours of use.

The first, a Maxtor D740X, lasted about 6 years before starting to fail. I was able to backup everything and still use it once or twice a year. But in the last boot, this month, the bad blocks started jumping. Well, it's been 12 years.

The other, a Samsung F1, which replaced it, is also completing 6 years, without any issues. It's getting slower, but not that much. When I installed it, before partitioning and formatting, I got 100kB/s. In the last years, around 70kB/s.

I'm not saying Maxtor and Samsung were better than the others. But what puzzles me are the numbers of DOA and failures in the first year of use reported be consumers. For most models I could see, they're around 20%. I know the shipment may damage or kill a hard drive, but it didn't change that much in the last decade. Apparently, the quality dropped a lot. And here in Brazil, things are worse, because you may buy a refurbished drive.