Does it seem that the normal (as in usual, not as in mentally correct) reaction to just about everything is to panic?
The stock market has always been a poster child for this phenomenon: 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 instead.
What does this have to do with computers? Well, have you 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 an ample 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 issue. Probably the only solution for most of us is to outwait it, which may take a while.
The Rain in Thailand Falls Mainly in the Floodplain
The rains came to Thailand in August and didn’t stop. You’ve probably seen the news reports of the devastating problems with flooding and the human toll. But Thailand is the major producer of hard drives, and factories where they are manufactured are concentrated in floodplain areas where protective dikes, despite efforts by Thai troops, were eventually breached.
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; also, hence the problem.
Western Digital (WD) makes about 30% of all the hard drives worldwide and 60% of its capacity was underwater. It also produces components for other manufacturers’ drives.
So, even though Seagate (No. 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 throughout the industry.
Supply and Demand
Hard drive manufacturing was not a lucrative business (notice the emphasis on “was”), which helps explain why manufacturers would take the chances they did in return for tax breaks. You’ve no doubt noted the always falling prices of drives — on sale days, 1,000-gigabyte external drives were available for $50. Not much margin there.
But factories were working at near-full production. Volume, 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 that end of the 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 entities that were 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. It’s 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.
However, 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 no doubt will 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 relearn 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.
It’s 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, its stock price has doubled, too.
Privacy — We’ve
Heard of That
You can opt out of this and you probably should.
Although Thanksgiving is in the rear-view mirror, let’s look at what’s probably the major turkey move of this year: HP’s handling of its Personal Systems Group.
It’s bad enough that HP pulled its TouchPad tablet six weeks after its introduction (and held the resulting fire sale), but the corporation talked openly about spinning off or selling the group that made consumer and small business computers and printers — the things HP is mostly known for.
The idea was eventually scrapped, but not before angering most of its business partners, especially its resale partners. Dumb, dumb.
Cliff Feldwick is president of Riverside Computer Consultants and handles PC troubleshooting and network setups for small businesses, when not pondering why companies do stupid things. He can be reached at 410-880-0171 or at firstname.lastname@example.org. Older columns are available online at www.feldwick.com.