Cloud Computing: Floods Lift HDD Prices Way Up
December 23, 2011
EMC is going to raise the price of hard disk drives 5%-15% starting the first of the year.
It said in an advisory to its channel that the price hikes will last for the duration of the crisis that has seen an estimated one-third of the world’s HDD supply effectively drown in the unforgiving Thai floods. That probably works out to something like 50 million-70 million drives…
Senior VP of global channel sales Gregg Ambulos claimed that EMC had absorbed the cost increases produced by shortages in Q4 "to shield our partners and customers from the impact of higher drive pricing," but now that supplies and stockpiles have shrunk further and capacity demand keeps escalating EMC’s going to have to pass the increases along "to offset the continued high drive prices we are seeing from our primary suppliers."
The price hikes will apply to HDD list prices across all of EMC business lines.
The company says it "hopes that this increase is temporary" but it can’t predict how long the shortages will last.
Some people think it could be well into 2013 before production is back to normal.
HP, whose new CEO Meg Whitman bragged that she thought HP had arranged for more than its fair share of existing supplies when the deluge hit, warned customers and resellers on November 21 to expect significantly higher prices on certain disk drives.
It didn’t say when and it didn’t say which and didn’t say how much, but apparently large-capacity SAS and SATA drives are in short supply. And it said component prices were up ~20%.
There are two beneficiaries in this tragedy: solid-state drives – as prices come down – and open source storage merchants like Nexenta whose marketing VP Bill Roth figures customers are going to rebel at paying 5%-15% on top of "EMC’s already usurious prices."
The longer the crisis lasts, he figures, the better it is for companies whose business models are based on OpenStorage. They’re not immune to price hikes in essential materials like disk drives, but their solutions, based on commodity hardware, are 60%-80% cheaper to begin with so any price hikes will be less disruptive to the customer.
He thinks the major storage vendors could be permanently damaged.
It also might be nice if we stopped building things on the edge of a precipice like Silicon Valley sitting on top of the San Andreas Fault.