Thailand Floods Continue to Impact Storage Market
When Thailand suffered flooding on a massive scale at the tail end of 2011, it sent a huge jolt to the hard disk drive storage market.
That's because the enterprise hard drive market has consolidated during the past 10 years from many companies down to just two key manufacturers: Seagate and Western Digital. While both are American companies, both source many of their components in Thailand, and both carry out final assembly there, too. Thailand is in fact the second largest producer of hard drives, second only to China.
It's hard to know precisely what that means in terms of reduced output -- only 60 percent of Western Digital's hard drives are assembled in Thailand, for example, but other assembly plants around the world may rely on Thai-manufactured components. Some industry analysts estimate global production has fallen by around 25 percent compared to pre-flood levels. The upshot is that hard drives are in short supply and prices have risen sharply; the consensus seems to be that while some of the rises seem to be overdone, things are unlikely to get back to their pre-flood state until the start of third-quarter 2012 at the earliest.
So what does this mean for your storage purchasing plans?
The first thing to understand is that the high-performance, enterprise-grade hard drives that go into servers and storage devices are the ones vendors make the highest margins on, even though these drives have about 90 percent of the same components as lower-end consumer-grade hard drives. Because of the higher margins, vendors have prioritized the manufacture of enterprise drives, making shortages in this area less acute than in the consumer drive space. In fact, shortages in the consumer space may be less significant than many people fear because sales of thin "ultrabook" devices are likely to account for a significant proportion of the laptop market over the coming months, and ultrabooks use solid state drive (SSD) storage, rather than hard disk drives, almost exclusively.
But there will be some shortages, for the next six months at least, which means hard drive prices will continue to be elevated. The good news, as Mark Peters, a senior analyst at Enterprise Strategy Group, points out, is that hard drive prices aren't as significant as they might seem at first glance. "The cost of a hard disk drive is certainly not the only cost of a storage system," he said. "If you double the cost of the hard drives, you may only increase the cost of a storage system as a whole by 15 percent. The TCO will rise by an even smaller amount."
One thing you should be doing is taking a closer look at solid state technology, according to Jim Bagley, an analyst at Storage Strategies. He said he believes that the increased prices for conventional hard drives shifts the economic argument decisively in favor of SSDs for many applications. "The wind was already in the sails for SSDs, and price rises for hard drives means that SSDs can now be deployed cost effectively against 15k (rpm) short-stroked hard drives," he said. Short stroking involves using only the small, fastest moving proportion of a hard drive's magnetic platters to reduce seek times and increase I/O rates. SSDs offer far higher I/O rates, and since all of an SSD storage capacity can be used, a single SSD has the potential to replace large numbers of short stroked hard drives while offering similar usable capacity and I/O rates.
Bagley said that thanks to surging demand for smartphones and tablets, a vast amount of new flash manufacturing capacity has come on stream during the past year or two. That means it is inexpensive in historical terms, just as hard drives are becoming more expensive. "I think you should be looking at flash storage rather than hard drives anywhere where you need speed: Anywhere where applications are virtualized on high end server hardware, anywhere where I/O is randomized." He also pointed out that SSDs are ideal for server boot drives, and reduced boot times can lead to increased administration efficiency in your data center.
Mark Peters agreed that SSDs look more attractive than ever before, but said he thinks any uptick in demand it is likely to be less pronounced than many are predicting. In part that's because SSDs will not replace hard drives in large storage arrays any time soon, he said. "Faced with a 10 percent to 20 percent price increase (in hard disk drive storage systems), you are hardly likely to go out and buy a solid state drive based system that costs even more," he pointed out. "What you should be doing is looking for better efficiency, maybe looking at adding a limited amount of solid state storage to your storage cache or controller if possible."
A drive toward more storage efficiency could also push you toward a renewed interest in storage tiering. Again, this could tempt you to adopt solid state drives for upper-tier storage, he said. Other efficiency-related technologies, such as deduping and thin provisioning, are also important, but most storage vendors will probably have been pushing them to you already.
But there is one very simple "technology" that you should take a good look at in the face of rising hard disk drives, according to Peters. "Many organizations are very slow to delete data that is no longer needed, perhaps because of laziness," he said. Peters points out that by managing the lifecycle of data more effectively, or simply getting rid of those "50MB PowerPoint presentations that haven't been accessed for eight years," you can get much more out of your existing storage resources without having to worry about buying new storage.
Perhaps the simplest way to avoid the impact of hard drive shortages and increased equipment costs -- without getting in to data lifecycle management or making any other changes -- is to look to the cloud for additional storage resources, Peters said. That's predicated on the assumption that cloud storage providers have existing spare storage capacity, which is almost certainly the case. Given that this capacity exists, and it was purchased by storage providers before any flood-related price increases, it would seem to make perfect sense to use it -- in some circumstances -- when you need more storage capacity. This may be just a short-term fix for them, until the hard disk drive market gets back to normal in six to eight months time, or it could turn in to something more long term -- a way of dealing with short-term capacity spikes on an ongoing basis.
The floods may provide an excuse for the likes of EMC and IBM to put up their prices, and they have certainly been an eye opener in terms of the world's reliance on one country for storage supplies, but in the end their impact could have been worse, Bagley concluded. "There hasn't been the huge negative impact that many people first feared, and if nothing else, this proves the resilience of the technology industry."
Paul Rubens is a journalist based in Marlow on Thames, England. He has been programming, tinkering and generally sitting in front of computer screens since his first encounter with a DEC PDP-11 in 1979.