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Driving a Hard Bargain

I hadn't checked up on hard drive prices seriously for some time because my storage needs, while continually outpacing my drive size, would do that to most any drive. So I stuck with my 105 MB drive and compressed everything in sight. When my hard drive seemingly died in a DWI-induced power surge, I ordered another 105 MB drive so the Safeware insurance would cover the replacement cost. Then, of course, my old drive came back to life a week later, recovering from SCSI self-test errors to complete health, so I can't collect on the insurance since there's no damage.

During all this I started watching prices a bit more, and although much lower than two years ago, prices seemed quite steady. I thought this was curious, but then Robert Brenstein sent me a note asking if I'd heard why all the mail order vendors had huge back order lists for the larger Quantum drives. Curiousity piqued, I called Paul McGraw, vice president of APS, a mail order drive vendor.

Apparently APS has been operating most of the summer on a 400 to 600 unit backlog on the Quantum 240 MB drives, and although Paul said that they actually had a few units in stock right now, most mail order vendors are in the same backlog boat. Paul recommended that people who want that specific drive call around to satisfy themselves that no company has them in stock, and then get on a waiting list somewhere because it may be a while before most vendors get those Quantums in any quantity. In other words, sign up now or be prepared to wait.

It seems that the root of this backlog traces back to Quantum itself. Of all the drives Quantum produced this year, only 20% of them were SCSI drives, the rest being non-SCSI drives for PC clones. That limits the supply a lot right there, but there's more. Big companies like Apple and Sun that use internal SCSI drives have first dibs on the drives, further reducing the supply that can reach drive vendors like APS.

Being good little capitalists, we all know what happens when supply is low and demand is high, right? Prices stay high. Demand seldom changes much once it's high, so the only way for prices to drop is for the supply to increase, and that's what Paul sees happening in the next few months, mostly thanks to Maxtor, another drive manufacturer.

Maxtor was on the brink of Chapter 11 bankruptcy some time ago, but with a combination of salutary factors, has managed to revitalize itself and become a force in the drive market again. According to Paul, the Maxtor 7213 200 MB unit is as good as the Quantum 240 MB unit for anyone who doesn't have a Quadra since the Maxtor drive isn't quite as fast as the Quantum, but it's still faster than the SCSI bus on all non-Quadras. This Maxtor drive has proven quite popular, and along with Quantum's higher prices, has given Maxtor the breathing room it needed. Now Quantum is starting to notice that the Maxtor drive is cutting into Quantum's business, so as supply goes up, price comes down and we consumers win again.

Another factor to keep in mind is that Maxtor and other companies have some 1" high 500+ MB drives coming out early next year. Both Paul and Cliff Wildes, president of Microtech, find these large drives extremely interesting, because of the small form factor (you'll be able to use them as internal drives) and new manufacturing techniques. These drives and some new 1.5" high form factor (actually 1.62" high), 3.5" platter, 1 gigabyte (GB) drives (i.e., 1 GB internal drives) should help lower the prices on larger end of the market. That in turn should help shrink prices for the medium size drives as well. Cliff agreed with this, although he feels that the price cuts on medium size drives will not be as significant, but only in line with the lesser price reductions that have occurred over the last six months. Smaller drives aren't likely to become much cheaper, simply because they're close to rock bottom already. But hey, everyone needs a bigger disk anyway, right?

Information from:
Paul McGraw, APS vice president
Cliff Wildes, Microtech president


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