It’s been several months since the flood waters in Thailand began receding and since ExtremeTech posted its last edition of HDD Pricewatch, but we’ve finally begun to see more stable prices for various hard drives. Through February and March, prices fluctuated significantly, often moving in contradictory directions. Now that things have settled, how’s the storage market faring?

For the big dogs, things are going pretty well. As we predicted, there’s been a wave of further consolidation; Hitachi and Western Digital have finalized the sale of the former’s HDD business unit to the latter, while Seagate recently announced its intended purchase of rival LaCie.

Way back at the beginning of this mess, we selected a basket of drives by manufacturer, capacity, form factor, and performance. We’ve had to make some alterations along the way, but have managed to keep things fairly consistent. Here is what we’ve uncovered…

We started off tracking the Western Digital WD10EARS but that drive has apparently been deprecated in favor of the EARX. Performance between the two should be identical, but while prices have come down from January, they remain far above Q3 2011 levels. That trend holds true across the board; prices are generally down from where they were, but nowhere near where they used to be.

Here’s the percent above baseline data in chart form. Again, solid declines are visible nearly everywhere; Western Digital’s price increases on its 2TB Caviar Green and Caviar Black are outliers. When we spoke to Dynamite Data’s Kris Kubicki last winter, he predicted that we’d see manufacturers dropping SKUs and reducing the number of legacy drives they built, and that may be happening. Several lower capacity drives have disappeared, including Samsung’s Spinpoint MP4. The good news is, the 750GB M8 HN offers more than twice the capacity for the same $89 price point the M4 was hitting in January.

Are things going to change any time soon? We doubt it. WD and Seagate both reported record profits this past quarter. In Q1 2011, Western Digital reported net profit of $146M against sales of $2.3B while Seagate recorded $2.7B in revenue and $93 million in net income. That’s a net profit margin of 6% and 3%, respectively. For this past quarter, Western Digital reported sales of $3B (thanks in part to its acquisition of Hitachi) and a net income of $483 million, while Seagate hit $4.4B in revenue and $1.1B in profits. Net margin was 16% and 37% respectively.

With profit margins like this, the hard drive manufacturers are going to be loath to cut prices. After years of barely making profits, the Thailand floods are the best excuse ever to drive record income for a few quarters. All of this means that while we expect prices to gradually decline, holding off on a necessary purchase doesn’t make much sense. If you need a drive, you need a drive; another six months may not show a dramatic return to form.

What About SSDs?

One of the predictions in the wake of the HDD floods was that SSD prices and adoption would spike thanks to the shrinking cost difference. That spike never materialized — SSD prices have continued a steady downward trend. Drives with full-featured controllers that would’ve been considered high-end just a year ago have now dropped to approximately $1 per GB.

128GB is an important price/capacity ratio for SSDs because it’s the point at which the drives offer enough storage space that switching over doesn’t feel like trying to slip into pants you haven’t worn since Bill Clinton was president. So how do these prices compare to hard drives in terms of cost-per-GB?

The hard drives still have a clear advantage there, despite the higher prices. Even Western Digital’s VelociRaptors, while still significantly more expensive than other hard drives, are just half the per-GB ratio of the SSDs. Then again, the shrinking gap points to the VelociRaptor’s relatively limited lifespan. The only way for WD to push the access speed envelope is to start incorporating cache in a hybrid structure like Seagate’s Momentus, increase the drive’s spindle speed to something approaching 15K, or both. The former seems far more likely than the latter; 15K hard drives run hotter, draw more power, and are noisier than anything enthusiasts are used to dealing with.

We don’t expect Flash prices to keep falling at the present rate; there’s a mountain of evidence to suggest that process node scaling will step on the brakes on that process. HDD capacities, in contrast, are headed into the stratosphere. Rather than slamming together in epic confrontation, the two standards are likely to co-exist for quite some time, with SSDs reserved for higher-end systems and a mixture of external drives, standard HDDs, and possibly HHD hybrid solutions picking up the majority of the market. That’s not to say we won’t see more notebooks continue moving towards solid-state storage at lower price points, but the fundamental capacity-vs-speed tradeoff isn’t going away.

We’d like to thank Kris Kubicki and his data analytics firm Dynamite Data for providing additional price information and market trends.

