Drive Prices Increase – Who Will Suffer Most?

Storagezilla calls out hard disk availability in his recent post.  In fact, I discussed the subject of drive prices last week with James Carter of Touchdown PR on my way to SNW Europe.  James highlighted he was seeing prices on standard drives having doubled recently.

I went back and looked at my last drive purchases – two Western Digital 2TB SATA-II drives at around £65 each.  Currently these are now retailing on Amazon for £150 each, with the latest 2TB drives around the £100 mark.

Prices have clearly risen sharply due to the flooding in Thailand, however I wonder, which vendor suffers the most in this scenario?

The most obvious answer would appear to be that the vendors with the least margin will suffer most.  Think of the likes of Drobo or Overland, who sell relatively low cost hardware.  Theoretically vendors such as EMC and Netapp should be able to swallow the additional cost, especially if they are already charging 10-15 times the underlying raw cost of the drive on a per terabyte basis.  The drive cost makes up a small part of their overall price.  The big vendors should also have the muscle to fulfill their demand first with what supply is available.

However I don’t think things are that simple.  Drobo arrays can be purchased without disk drives, allowing them to use whatever drives are available, so drive prices won’t hurt bare array sales.  These arrays also allow mix and match and to upgrade per drive, so are potentially more flexible.

Bear in mind savvy customers of EMC and others will have negotiated quarterly price erosion, so those on existing deals will probably not see much change.  I would expect the big boys to have hedged their supplies through multiple supply lines and stockpiles but their margins will be affected if supply problems persist.

It’s also worth thinking about efficiency at this point.  If you’re not using thin provisioning or other data reduction technologies, then you should be.  If your vendor doesn’t offer it, then there are plenty out there who do.  As prices rise, it may be time to look again at implementing these features and fixing the processes that stop you using them today.

One last thought.  Are NAND prices being affected?  If not then the SSD array manufacturers must be rubbing their hands together with glee.

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