Hard drive prices drop as PC demand rises

Competition from flash memory and increased shipment of PCs and consumer electronics are driving down prices and fueling demand for hard disk drives, survey shows

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

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. Desktop hard drive prices fell to $51 in the third quarter of 2007, compared to $52.75 the previous year, according to the survey.

Overall, about 134 million hard drives shipped in the third quarter of 2007, compared to 114 million the previous year, a 21 percent year on year increase, iSuppli found.

Prices also dropped from intense competition between six hard drive vendors: Seagate, Western Digital, Hitachi Global Storage Technologies, Fujitsu, Toshiba, and Samsung, said Krishna Chander, senior 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, which 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 witnessed smaller price drops, while newer high capacity drives saw massive price drops, Chander said. Notebook drives with 320GB of storage will drop because 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 phased out and users replace those with higher capacity drives while expecting the same price.

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 (SSDs), purported by many to be future replacement of hard drives, currently cost between $7 and $10 per gigabyte, which makes them much more expensive compared to magnetic desktop disk drives, which cost $0.20 to $0.30 per gigabyte, Chander said. However, SSDs have longevity and storage issues, which 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.

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