I agree with pinothyj. It was a good read, which put things in perspective.

These price increases are normal in any industry where products are pushed out of equilibrium in commodity status to a rare status. It doesn't matter what causes the rarity, artificial like diamonds, crude oil, farming policies, or natural like a memory factory blowing up in the 90's pushing prices in excess of 400%, a flood that wipes out 70% of the motor supply needed to even build a HDD. It is how economics works. Yes 'evil' corporations love profit but that is the reason they exist. But the fact is HDDs are now rare again and it will take some time for that equilibrium to come back. As long as government stays out of the way, and competitors are allowed to remain in the market it will happen, it always does.
How did we get here? How did the HDD manufacturers get in the predicament of relying soley on a single manufacturer that produced 70% of the world's HDD spindle motors? By consumers wanting lower prices. Increasing competition and very thin profit margins pushed these products to a state of equilibrium where the company is only producing them to stay afloat. Costs need to be cut year over year so the company can show a profit, even if it is minuscule. Shutting down in-house production of motors and outsourcing them will cut production costs benifiting the corporation in some profit and benifiting the consumer in lower prices. People ask why hard drives haven't improved as much as they should have. In 1990 the average consumer HDD was 40MB, in 2000 it was 40GB, we should have 40TB drives by now. My opinion is that R&D has slowed due to lack of demand and lack of funds while producing product in equilibrium for so long. Why spend the millions or billions to develop it when profits needed to pay back this R&D won't materialize?
Have a little faith and look at the bright side. HDD manufacturers once again have a sizable R&D budget. Money also attracts the talent necessary to developed better products. Talent that has likely left for greener pastures long ago. They are not going to pocket it, not if thye want to be around in the future.

So, if we all stop buying hard drives, the prices will fall towards zero?

Don't think so.. you must be in the 99% that believe that supply/demand is still the way that prices are fixed!

This article forgets to mention that many large OEMs started stockpiling drives to ensure they could fulfill orders during the manufacturing outage. That action drove a sharp increase in prices for regular consumers. In addition to the price charts, it would be helpful to see the numbers of units shipped over these same time periods.

Completely agree! Unregulated marked make a few powerful at the cost of many that go down. There will never be a truly free market!

I recently bought a 320gb Spinpoint for a system I was fixing, I was shocked that the price was still as high as it was. I was also pissed because it meant I couldn't ask for as much for labour.

The greatest fear now, I think, is that HDD manufacturers won't be so quick to drop their prices, even as stocks return to normal levels.

rpsgc,

Can you help me understand where you see a better solution than a free market? It is certainly not perfect but in a market where you can buy a 3TB disk for $169US that is pretty efficient. Do you envision some type of world government that can oversee supply and demand? Just how would that work and do you think it would ultimately provide better goods and services at competitive prices? North Korea and the old Soviet Union gave it a heck of a try - but they did come a lot closer to equity for everyone - everyone was poor and couldn't even imagine owning a 3TB disk. I guess a reference to GM and Wall Street in the U.S. would be warranted. However, if government didn't prop up poorly run companies or incent the transfer of risk to taxpayers the markets would have likely corrected the situations - albeit painfully. Again, how do you see government regulating this across global markets? Thanks.

I'm doing my part to keep prices down by reducing demand.

I'm not buying until prices come down.

I've postponed buying computers and other gadgets that use hard drives.

Yes, it hurts the economy but I am doing my part to keep HDD prices down.

One thing the article doesn't address is that there have often been limits to how many hard drives a person can buy from different online and brick & mortar stores. Prices may actually be artificially depressed below what they naturally would be if a limit like this is used, so price alone isn't the whole story.

The Tech Industry has obviously never heard the old, but wise advice - Never put all of your eggs in one basket.

We humans sure are dumb for such smart people. We just keep repeating the same historical mistakes over and over. That and the opposable thumb are the two things separating us from animals, because the ability to reason sure isn't in the mix.

Um... If not for free markets driving competition, we'd still be paying $5/MB of disk space.

Although that competition is drying up as HD vendors buy each other.

I can think of some places in the US NOT subject to floods, where access to major markets is excellent (good rail, road and air transport) AND where labor is cheap and land cheaper. Let WDC build a disk drive factory in one of these places. Mind you, no slave labor available like in China, but plenty of government incentives and much lower risk. And maybe if some components start getting made in the US, then maybe more computers will be assembled here.

Stop. You're making too much sense.

What ever happened to Moore's Law?!? Proof that we are being taken for a ride......

If you don't like the price of HDD's, don't buy. When demand shifts, so will the corresponding price on the the supply-demand curve intersection. One advantage I foresee is downward price pressure between competitors for a substitute product: SSDs.

HDD manufacturers produce devices with greater densities, faster speed, and more power efficiency to differentiate and maximize profits. This does not happen for free. Let's face it, HDD's were a bargain; now they are simply priced based on supply. Yes, manufacturers will enjoy increased profits, but prices will eventually settle.

Production was back to normal -- 100% -- in Thailand BEFORE Christmas 2011.

The fact that these high prices are continuing is a SHAM; obvious price gouging on the part of the HDD industry. Buffoons who spout out the usual "supply and demand" drivel as reasons for the high prices must love getting buttreamed. Nothing to do with that. It's plain and simple greed. Another shinging example of unfettered capitalism.

I've bought FOUR SSDs in the meantime. I'll be speaking with my wallet.

When 2TB externals go down to no more than $70, then I'll know these companies are serious about wanting to compete again.

It's no different than the oil prices. Those never quite came back down to where they should have, either, and no one did a damn thing about it. We just complain on forums, and pretend to be activists.

We are headed for a fall. All great empires eventually do.