For hard drive prices, the race to zero is over: Nobody won. For the past 35+ years or so, hard drives prices have dropped from around $500,000 per gigabyte in 1981 to less than $0.03 per gigabyte today. This includes the period of the Thailand drive crisis in 2012 that spiked hard drive prices. Matthew Komorowski has done an admirable job of documenting the hard drive price curve through March 2014 and we’d like to fill in the blanks with our own drive purchase data to complete the picture. As you’ll see, the hard drive pricing curve has flattened out.
75,000 New Hard Drives
We first looked at the cost per gigabyte of a hard drive in 2013 when we examined the effects of the Thailand Drive crisis on our business. When we wrote that post, the cost per gigabyte for a 4TB hard drive was about $0.04 per gigabyte. Since then 5TB, 6TB, 8TB and, recently, 10TB hard drives have been introduced, and during that period we have purchased nearly 75,000 drives. Below is a chart by size of the drives we purchased since that last report in 2013.
- We purchase drives in bulk, thousands at a time. The price you might get at Costco or BestBuy or on Amazon will most likely be higher.
- The effect of the Thailand drive crisis is clearly seen from October 2011 through mid-2013.
The 4TB Drive Enigma
Up through the 4TB drive models, the cost per gigabyte of a larger sized drive always became less than the smaller sized drives. In other words, the cost per gigabyte of a 2TB drive was less than that of a 1TB drive resulting in higher density at a lower cost per gigabyte. This changed with the introduction of 6TB and 8TB drives, especially as it relates to the 4TB drives. As you can see in the chart above, the cost per gigabyte of the 6TB drives did not fall below that of the 4TB drives. You can also observe that the 8TB drives are just approaching the cost per gigabyte of the 4TB drives. The 4TB drives are the price king as seen in the chart below of the current cost of Seagate consumer drives by size.
Seagate Hard Drive Prices by Size
The data on this chart was sourced from the current price of these drives on Amazon. The drive models selected were consumer drives, like those we typically use in our data centers.
The manufacturing and marketing efficiencies that drive the pricing of hard drives seems to have changed over time. For example, the 6TB drives have been in the market at least three years, but are not even close to the cost per gigabyte of the 4TB drives. Meanwhile, back in 2011, the 3TB drives models fell below the cost per gigabyte of the 2TB drives they replaced within a few months. Have we as consumers decided that 4TB drives are big enough for our needs and we are not demanding (by purchasing) larger sized drives in the quantities needed to push down the unit cost?
Approaching Zero: There’s a Limit
The important aspect is the trend of the cost over time. While it has continued to move downward, the rate of change has slowed dramatically as observed in the chart below which represents our average quarterly cost per gigabyte over time.
The change in the rate of the cost per gigabyte of a hard drive is declining. For example, from January 2009 to January 2011, our average cost for a hard drive decreased 45% from $0.11 to $0.06—$0.05 per gigabyte. From January 2015 to January 2017, the average cost decreased 26% from $0.038 to $0.028—just $0.01 per gigabyte. This means that the declining price of storage will become less relevant in driving the cost of providing storage.
Back in 2011, IDC predicted that overall data will grow by 50 times by 2020, and in 2014, EMC estimated that by 2020, we will be creating 44 trillion gigabytes of data annually. That’s quite a challenge for the storage industry especially as the cost per gigabyte curve for hard drives is flattening out. Improvements in existing storage technologies (Helium, HAMR) along with future technologies (Quantum Storage, DNA), are on the way—we can’t wait. Of course, we’d like these new storage devices to be 50% less expensive per gigabyte than today’s hard drives. That would be a good start.