Hard Drives in Hard Times

Have you shopped for a hard drive recently? If you have, then you might have noticed that prices are suspiciously high. For a long time, the price per gigabyte of storage has been dropping steadily. At one point, a terabyte hard drive, which had been joked about only a few years prior as being an “excessive” amount of space, could be found very regularly for around $90. Suddenly, however, prices spiked. Instead of becoming steadily cheaper, prices actually rose–a shocking turn of events for a computer component. In recent times, the prices have stabilized and started dropping again, but have not yet broken the previous price barrier. Newegg.com, a major online electronics retailer, lists most of its top-rated 1TB commercial hard drives at around $130.

What happened to cause such an interruption? In 2011, a monsoon hit Thailand, causing massive flooding. Thousands were displaced and hundreds died in the initial flood.[1] A major exterior impact of this flood was due to the fact that a great deal of hard drive manufacturing takes place in Thailand. The floods caused about $1bn in damage to the facilities directly, and infrastructure damage and the displacement of workers by the floods will delay output further. iSuppli estimated the jump in prices to be about 28%.[2] Given that most industry analysis says that inventories will still be strapped, we should not expect a return to falling prices any time soon, but we should be spared the shock of another price increase.[3]

The flooding in Thailand has, ironically, created a unique opportunity for another product in the computer storage industry. By essentially freezing the falling prices of hard drive, solid state drives (SSDs) have become more competitive. SSDs differ from hard drives in that they have no moving parts, and consequently have extremely fast read and write speeds as well as extreme resistance to physical damage by dropping and impact. So, what’s the catch? SSD’s are extremely expensive by comparison; the top rated 64GB SSD on Newegg.com sells for $95. Recall that for only $35 more, you can get a hard drive with sixteen times the capacity. Even so, if not for the Thailand flooding, that difference would have been even larger. Furthermore, less and less storage is actually needed for most computers and other electronic devices nowadays. Cloud storage is becoming extremely popular, so you only need as much storage as will last you until you can re-sync with the internet.[4]

The floods may have not sounded the death knell of hard drives, but they certainly helped speed it along. In the coming months, SSD’s will become cheaper and more competitive, which should lower hard drive prices by reducing demand. In time, the dynamic of more storage for less will return, but SSD’s will be fully along for the ride.