Written December 2011 by Cliff Feldwick
Does it seem that the normal (as in usual, not as in mentally correct) reaction to everything is to panic?
The stock market has always been a poster child for this; the only way to understand it is to assume that it is bipolar. Up, down, up, down – driven by the slightest whiff of news and ready to rush off the cliff at the slightest provocation. Studying economics is pointless; study mob psychology.
What does this have to do with computers? Tried pricing a hard drive lately? Prices have more than doubled, often tripled, and supply is shut tighter than a politician’s brain. The only sources that were immune (for a time, probably not now) were retailers that had a supply in inventory. Indeed, while Newegg and similar discounters were limiting purchasers to one drive a week, Best Buy was still running ads with external drives at record low prices.
There is a real cause for this, but panic is exacerbating the whole thing. Probably the only solution for most of us is to outwait it, which may take a while.
The rain in
The rains came to
Why would anyone build in a floodplain? Well, there are economic incentives for Thai manufacturers to build in specified “industrial estates”, many of which are in low-lying areas. Hence the dikes. But also, hence the problem.
Western Digital makes about 30% of all the hard drives worldwide, and now 60% of its capacity was underwater. They also produce components that go in other manufacturer’s drives. So, even though Seagate (#2 in production) was high and dry and even though WD made primarily laptop-size drives in the flooded factory, rather than the larger ones used in desktops and servers, the ripples have spread to everything.
Supply and Demand
Hard drive manufacturing was not a lucrative business (notice the emphasis on “was”). This helps explain why manufacturers would take the chances they did in return for tax breaks. You’d no doubt noted the always falling prices of drives – on sale days, 1000 gigabyte external drives were available for $50. Not much margin there. But factories were working at near-full production. Volume, volume; we’ll make it up on volume. Most distributors and computer manufacturers did not keep a large supply in stock either. One of the fastest ways to lose money in this business is to have drives on your shelves that cost more last week than this. So when the excrement engaged the propeller, everyone panicked. As predicted by supply and demand, prices have gone bonkers and those lucky enough to have any in stock are rationing them out.
What to do
Well, in the immortal words of The Hitchhiker’s Guide to the Galaxy, don’t panic. Probably not much consolation if the boss has told you to “pick up some of those cheap end-of-the-year computers” and upgrade the office. You’re screwed. But for most of us, time is on our side. Manufacturers will shift as much production as possible to other areas of the world as quickly as they can, if only to profit from the new pricing and higher margins. The underwater factories were insured, and the Thai government will no doubt help rebuild; there are jobs at stake there. While it may take most of 2012 for prices to get back to where they were, they will.
In the meantime, you might want to re-learn the value of restraint. You may not need to copy all of those songs into iTunes. No need to have all your rough drafts saved. Search for duplicates of things and find the Delete key. Not much fun, but restraint seldom is.
Oh, and if you were thinking that this might be a great time to buy stock in high-and-dry Seagate, forget it. As of this writing, their stock price has doubled too.
Privacy – we’ve heard
of that
Those of you using Verizon for your mobile carrier should know that they have changed their privacy policy to allow them to use your browsing and search history to “deliver more accurately targeted mobile advertising”. Just what we all wanted. You can opt out of this, and probably should.
Gobble, gobble