Disk Drive Pricing Winners and Losers

By Henry Newman

In my last blog post I looked at the huge price increases in disk drives. Now, I am thinking about the winners and losers because of the dramatic price rise. The obvious losers are end users who need a drive that is easy, but storage companies large and small are going to lose also, but to different degrees.

Larger companies are going to be under extreme pressure to hold their prices for customers, given the prices they got in 2011 and 2010. Some of these large companies might have gotten forward pricing such that they negotiate a price for drives for x numbers of months in advance. I do not know either way, but it is possible. On the other hand, for the most part, for years disk pricing dropped month by month and year by year, so maybe not. Smaller storage companies buy when they need to and do not have large inventories. If you have a limited supply of drives and you are a large disk manufacturer, who are you going to service first? My guess is you will service the companies you have committed large volumes to monthly.

Again, I do not know, but I am speculating that large storage companies have a monthly minimum order. They add to this order based on additional requirements. That way they always have inventory. My guess on the second commitment would be companies in the first category that then add to their order. The last group would be companies that order irregularly. This is what happens in other industry when there is a shortage. You name the product or commodity, from oil and gas to grain to cars. It is how the market works and I do not think disk drives will be any different.

This article was originally published on January 04, 2012