The Tipping Point for Hard Disk Prices?
by Hu Yoshida on Jan 18, 2012
Q1 2012 marks a major turning point in the storage industry. After 50 years of price declines in the magnetic disk industry, we are seeing what most analysts predict to be a 5% to 20% increase in disk prices due to the catastrophic floods in Thailand, which has had a major impact on the disk supply chain. While the manufacturers are hoping to get their capacity back on line to ease the supply shortages by the second half of this year, the cost of rebuilding their manufacturing capabilities will impact prices for some time. This additional cost will also impact the investments required to deliver next generation higher capacity disk technologies, like Bit Patterned Media or Heat Assisted Magnetic Recording, which are on the roadmap for disk drives.
Above is a chart showing disk drive capacity increases going back to 1980, which is truly phenomenal. Due to this rate of capacity increase, the industry has enjoyed an annual price erosion of about 20% to 30% per year on disk media. However, you can see that the density curve is starting to slow down as we approach the limits of current perpendicular recording technologies.
With this historic price erosion, most data centers depreciate their enterprise storage over three years while midrange storage is typically depreciated over five years considering it has been cheaper to buy new than to maintain the old after that time frame. If this price erosion starts to slow down, data centers may need to extend their depreciation to seven years. By this time, the disks will be in the five to ten TB range, so keeping the media longer may not be a bad idea.
However, there is a lot more technology that goes into storage systems than the disk technology and the rate of that technology has been increasing rapidly with thin provisioning, data mobility, tiering, replication, and closer integration with the application layer through APIs, plugins, client/providers, adapters, and snap-ins. That means that a five to seven year life cycle for storage systems will make your storage system non-competitive. The reason why enterprise storage is capitalized over a shorter period than lower cost modular storage is because of the higher technology cycle of enterprise storage.
An approach to solving this is to separate the disk capacity from the enterprise storage system controllers, so that you can keep the storage system controllers current with systems technology on a three year cycle, while you refresh the disk capacity on a five to seven year cycle. Since the storage media is still the bulk of the cost of a storage system, the longer depreciation cycle will help to reduce the capital costs. You can do this with an enterprise storage control unit, which also has the capability to virtualize external storage systems. This is what we provide with VSP.
What are your thoughts? Are the price increases that we expect this quarter just an anomaly and will we go back to enjoying the price erosion that we have enjoyed for the last 50 years? Or has this changed forever?
Is this a tipping point in the way we capitalize storage assets?
For other posts on maximizing storage and capacity efficiencies, check these out: http://blogs.hds.com/capacity-efficiency.php
I’m not sure what you mean when you say “the higher technology cycle of enterprise storage”. Enterprise storage has different definitions, but usually ends up being all the arrays that support mainframe, as well as some large scale open systems arrays. Of this space, the open systems arrays might be considered as having a faster tech cycle, but the mainframe arrays don’t.