Brian's Brain

The belated follow-up to an earlier writeup...

A bit more than three weeks ago, I pointed out some pretty amazing sub-$80 prices on 1 TByte HDDs, both bare and in enclosures. That capacity point's sub-8 cent/GByte metric has held pretty constant since then, judging from data points I've encountered on sites like Dealnews and Techbargains. And I had to smile earlier this morning when, in researching this particular piece, I stumbled across a post I published only 1 year, four months and a handful of days ago, which expressed incredulity that a 1 TByte HDD had dropped to a per-GByte pricetag more than twice as high as this, specifically $175.99 i.e. sub-18 cents/GByte.

I've also been tracking the ASPs of next-generation 1.5 TByte HDDs, which are even more impressively priced nowadays (but at what consequent profit margin...positive or negative...and at what subsequent supplier attrition-and-consolidation impact? Inquiring minds want to know...). Over the past two months that I've been collecting RSS feeds on the topic, I've seen bare drives as low as $105.99, enclosure-clad drives for only $2 more, more exotic external drives which also offer ESATA and FireWire connections for less than $145, and a two-drive bundle (one bare and one enclosed, the latter presumably for backup purposes) for $219.98. Network-attached units are even well under $200.

Contrast these two capacity points with the latest-and-greatest 2 TByte threshold. Western Digital unveiled its 4-platter Caviar design in late January at a $299 MSRP. Two-plus months later, that pricing is still holding pretty solid, and within the last two weeks WD announced external versions of the drive at a range of MSRPs from $329.99 to $379.99. Ironically, you can also buy 2 TByte external drives from WD for around $190 and from third-party suppliers for $5 or so less...but these particular storage devices achieve their lower prices by bundling together two 1 TByte HDDs in concatenation and/or RAID 0 configurations.

So what's going on here...why are 2 TByte HDDs selling at the 15 cent/GByte level, while drives half that size are priced twice as aggressively on a per-GByte basis? In a word: competition. WD is following in the footsteps of Hitachi, who (as I first mentioned back in early January 2007) consciously decided to launch its 1 TByte product at a platter count surplus (specifically: 5 total) compared to competitors' planned offerings, By doing so, Hitachi ended up with a noisier and more power hungry drive than it otherwise would have...but the company also ended up with around six months' worth of competitive isolation at that particular capacity point. And given that videographers, IT directors and other bit-hungry users were happy to pay whatever price Hitachi charged for the drive, I daresay the company probably cultivated a fair bit of fiscal upside during that timespan.

Considering that the Hitachi 1 TByte HDD cost $399 at introduction in early 2007, WD's $299 pricing for its 2 TByte drive seems quite charitable in comparison. Nevertheless, when competition inevitably emerges at that capacity point, you should expect prices to begin to plummet, especially when drives at higher areal density than WD's offering (400 GBytes/in²) and therefore with lower platter counts than WD show up. Keep an eye, for example, on Seagate, who (as the company's unfortunately prone to do on an ongoing basis) pre-announced an enterprise-targeted 2 TByte HDD at the same time as WD, but without pubished pricing and with availability not forecasted until some time in the third calendar quarter. And keep an eye on Samsung, who has become very aggressive of late with respect to bit-packing capabilities but has a pretty dismal track record of delivering on its shipment promises.

I wonder how long it'll be before I'm telling you about 2 TByte HDDs priced at less than 8 cents/GByte? Any guesses, readers?