Comments on: Disk storage vendors hit by sales drop

First-quarter sales slump 18 percent to $5.6 billion, with the pain spread among the likes of IBM, HP, and Dell. Total disk capacity at businesses, however, is up.

[monkeyfun14]

Why is this news?

Less computer sales obviously means less harddrive sales.

Unless people just buy them for the hell of it?

[Random_Walk]

I think you're looking at this from the wrong angle.

First off, we're talking enterprise-class storage, not consumer storage (as in: I sincerely doubt that Joe Sixpack runs out and buys a NetApp cluster and a couple of racks for his home network).

Second off, over time (assuming you've worked in or around the IT industry), you would have noticed that storage prices have dropped like a rock over the past few years. This drop has been masked by industry growth, but now we can see it raw.

There was once a time when you (almost literally) weren't allowed to buy an EMC rig without training in its use, and if it were anything other than entry-level gear, you weren't allowed to touch it at all (a technician came out and did that for you). You were lucky if you got 768GB (not TB, GB) of storage for less than $100k (and got stuck with a 30k/yr maintenance contract).

Disk storage demand has gone up, naturally... HIPAA, SOX, and ISO (insert number here) , and a boatload of other acronyms that mention mandatory data retention has driven a huge chunk of that... :)

[inachu]

I am waiting for prices to come down $25 or more then I will buy 7 new drives. No I do not do mail in rebates.
If I can't get the sale price in the store at time of purchase then I do not buy it.

Why are OEM hard drives not sold in boxes VS retail?

[monkeyfun14]

Because that's the difference between OEM and Retail.

OEM drives are cheaper because they are bought by the thousands.

[magusat999]

Where is Seagate / Western Digital on the chart?

Another aspect to consider is the price of software which means less demand; the availability of media to place on the drive, and restrictions which re getting tighter and tighter (for example DRM protected media, which usually carries a price-tag to go along with it; less available, affordable software, such as PC games and common applications. People simply have less to put on a drive, so of course they are going to stick with the old one, and you can only fill an app with so much fluff before people just reject it out of hand.

Merging software companies also contribute to less reason to buy a new drive. For example, until Autodesk went crazy and purchased both Maya and Softimage, people who were trying to learn skills necessary to enter into the 3D fields had to have 3dsmax, Maya and XSI installed (if they could afford it). Now that the same company has all three, artists would rather choose the best one form that company - we don't trust that Autodesk will continue to support and allow all three products to grow independently. So if you count the application space, plugins, textures, renderers and other 3rd party helper software that adds up to a massive amount of hard drive space that is now available. Why buy another hard drive? This one is still half-empty.

Another thing is that disk storage vendors are stuck. You buy the largest drive you can find, and maybe an external. If it fails on you, you won't buy from them again. So that means you expect long life out of a drive, and you won't upgade unless you absolutely run out of room - which for some means they have to stop selling dvd recordables too, because you burn it off and continue to use the drive. So they cannot do what software companies do - break the app, or let it get out of date and then come out with a new version. What they are doing, though, is raising the prices so high to offset the fact that they do not benefit from constant turnover that it is biting into their unit sales.

My advice to them is to stop trying to dominate the world. Just make and sell what they can, and keep the company small. Stop overspending on things not related to the direct business, and find a way to lower prices so that a drive doesn't cost as much as a whole computer. If they want to make more money, make and sell other products.

[Random_Walk]

"Where is Seagate / Western Digital on the chart?"

Enterprise, not Consumer. Think "SAN" and not "disk".