Hard drive prices, about a year ago, had stabilized down after a period of sharp fall, due to shortage of hard drives. The depreciation in the price was very less or even negligible in some cases. A couple of months ago, I had gone to the wholesale market to get a few things and I noticed that the prices of hard drives had actually shot up by about 15-20 $. I certainly had expected the prices to come down but was surprised with the sudden rise in the prices.On enquiry, I found out that there was shortage of hard drives (especially Seagate ones) in the market due to under supply. A little googling shed more light on the matter. The reason was that for the past 2-3 quarters, the demand for desktop computers have been on the rise but the hard drive producing companies still had not increased their production capacities and continued to maintain levels they had adopted during the recession period(source). Their argument was that technology had moved away into its next phase (read SSDs) and there was no point in investing in older technology. This actually forced the prices upwards and helped the manufacturers make better profits than they had in years.
But my recent visit to the market brought to my notice that the prices have started showing a downward trend yet again. Recently, the manufacturers had yielded to the industry demands and had increased the production of the conventional hard drives fueled by a healthy demand of desktop computers and the slow market acceptance of the SSDs (mostly due to their high costs). Thus the market had an increased supply of components but the recent European crisis seems to have decreased the forecast margins for pc demand and therefore there seems to an over supply of hard disks at the moment, thereby causing a downward trend in their prices.
Hard drives with bigger capacities have shown steeper fall in their prices and the fall is expect to continue till at least the end of the year, after which a revision of demand estimates against production estimates will determine the future of the pricing wars.
This post was originally guest authored by me for CrazyEngineers for their blog - Voice. You can visit the blog for the original article here