Hard drive prices drop as PC demand rises

Flash memory evolution is having a positive effect on hard drive prices

Competition from flash memory and increased shipments of PCs and consumer electronics products are driving down the prices of and fueling demand for hard disk drives, according to a survey released by iSuppli Corp. yesterday.

Average pricing of notebook hard drives tumbled, falling to $53 in the third quarter of 2007, from $86 in the same period during the previous year, according to the survey by the El Segundo, Calif.-based market research firm. Desktop hard drive prices fell to $51 in the third quarter of 2007, compared to $52.75 the previous year.

Overall, about 134 million hard drives shipped in the third quarter of 2007, compared to 114 million the same period a year earlier, a 21% year-on-year increase, iSuppli found.

Prices also dropped as a result of intense competition among six hard drive vendors: Seagate Technology LLC, Western Digital Corp., Hitachi Global Storage Technologies, Fujitsu Computer Products of America Inc., Toshiba Corp. and Samsung Electronics Co., said Krishna Chander, an analyst at iSuppli.

"Prices will always come if there is enough competition. If one vendor is bringing [the price] of a drive down, everybody wants to bring it down," Chander said.

The most popular notebook hard drives were in the 100GB range, and they carried an average price of $50, Chander said. Low-cost desktop PCs, especially in Asia, shipped with cheap $40 80GB hard drives that brought down the average selling price of desktop hard drives, Chander said. The price of 320GB desktop hard drives averaged $65, Chander said.

Lower-capacity notebook drives showed smaller price drops, while newer high-capacity drives saw massive price drops, Chander said. Notebook drives with 320GB of storage will drop as a result of the addition of new features, while prices will stabilize on lower-capacity notebook storage devices like 80GB hard drives, Chander said.

Comparatively, desktop hard drive prices are stable even as storage capacity approaches 1TB, Chander said. Lower-capacity drives are being phased out, and users are replacing those with higher-capacity drives but expecting prices to remain the same.

For the study, prices were measured on a disk basis, not per-gigabyte, Chander said.

Prices for hard drives may also drop as flash memory evolves, he said. Flash memory supplements hard drives on hybrid drives, but as flash makes inroads into the storage market, it could drop hard drive prices, Chander said. "Flash is an added bonus to bring hard drive prices down," Chander said.

Solid-state drives (SSD), purported by many to replace hard drives in the future, currently cost $7 to $10 per gigabyte, which makes them much more expensive compared to magnetic desktop disk drives, which cost 20 to 30 cents per gigabyte, Chander said. However, thee are storage- and longevity-related concerns about SSDs, and they should keep the demand for hard drives high for many years to come, Chander said.

"Data on SSDs will exist for 10 years at the most, and data on hard drives will exist for 50 years or more on a hypothetical basis depending on how data is accessed and used," Chander said. But that could change in the future, he added.

Copyright © 2007 IDG Communications, Inc.

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