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Western Digital agrees to buy SanDisk for about $19B

bloomberg.com

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Re: Western Digital agrees to buy SanDisk for about $19B

#41

Post by JoeAltmaier »

bryanlarsen wrote: post #40
sschueller wrote: post #3

This sucks for consumers. Prices are already way to high for HDs and don't seem to come down anymore. It is as if there is some sort of price fixing going on.

Prices of hard drives historically haven't come down. For a very long time consumer hard drives have been between $50 to $200. What changed over time was the size of the drive you could get for $X. That's still happening, but it's happening a lot slower than it used to be.

That's an important point. Drives the same size as those 5 years ago go down in price, but at some diminishing rate as they asymptotically approach zero $.

With storage its hard to say exactly what its doing, because it won't hold still to be measured. You have to allow multiple variables to change in any stats collected over time (capacity, physical size, speed, volatility).

It seems reasonable to chart the price of some standard capacity (most common?) over time. Is that changing any more?

Re: Western Digital agrees to buy SanDisk for about $19B

#42

Post by 212d1d »

mbesto wrote: post #20
petra wrote: post #8

Earlier quoted context omitted.

>> after the acquisition doesn't pan out. Considering that this is common , one wonders - wouldn't it be better investing the $19 billion in innovation, even if in non-related fields ?

This is a common misconception by non financial people (no offense). You have to look at this from a finance and risk perspective. 1. Cash lying around in your bank account is usually a poor use of working capital (you are effectively "losing" money by it sitting in the form of cash) 2. Investing in "innovation" is always risky. Look at how many internal Google apps get scrapped a year or two into launch. They effect…

1. This is not cash in a bank. 2. Innovation is a requirement not an option. 3. Innovator's Dilemma completely contradicts the point you attempt to make in #2.

Re: Western Digital agrees to buy SanDisk for about $19B

#43

Post by whoopdedo »

digitalzombie wrote: post #7
sschueller wrote: post #3

This sucks for consumers. Prices are already way to high for HDs and don't seem to come down anymore. It is as if there is some sort of price fixing going on.

Yeah seriously, SanDisk own patents to flash IIRC, their stuff is always less than their competitors. I hope WD isn't going to jack up prices.

I don't think WD has any motivation to increase prices. The point isn't to stop SanDisk from competing with them. They need a SSD product and acquisition is easier for them than developing their own.

What I wonder is if WD will continue the green and blue lines. The writing is on the wall for spinning disks. They may reduce the number of HDD models they sell and make SSDs the new green.

Re: Western Digital agrees to buy SanDisk for about $19B

#44

Post by Igglyboo »

sschueller wrote: post #3

This sucks for consumers. Prices are already way to high for HDs and don't seem to come down anymore. It is as if there is some sort of price fixing going on.

I don't think I've seen them ever come down within the past 10 years, all that happens is that storage space goes up and smaller drives stop being produced.

Re: Western Digital agrees to buy SanDisk for about $19B

#45

Post by SixSigma »

anoother wrote: post #17
hga wrote: post #14

Earlier quoted context omitted.

Hmmm, when did the price decreases stop? I last bought some high capacity drives in 2011 just before the floods in Thailand zapped the industry, and I now note I can buy twice the capacity, 2TB -> 4TB, for $35 less. There could be demand issues, as companies like Amazon, Google, Backblaze, etc. etc. buy them in mass quantities to offer redundant cloud storage. At the other end, SSDs have got to be eating the lunch of…

Really? Before the flood, I seem to remember you could get a 1TB Samsung F1 7200rpm drive for £30. Now, an equivalent drive will set you back around £35, and it's taken a long time to reach that level...

According to the Bank of England Inflation Calculator [1]

£30 in 2010 would be £34.35 in 2014

(I had to do it that way, it only goes up to 2014)

[1] http://www.bankofengland.co.uk/education/Pages/resources/inf...

Re: Western Digital agrees to buy SanDisk for about $19B

#46

Post by InclinedPlane »

trymas wrote: post #4

I always have thought that companies were bought for a price of it's market value (stock price * number of stocks), or if someone did not wanted pay all in cash they would've tried to compensate in other ways until market value is reached. But here WD bought SD for ~85-86$ per share, when it was worth ~75$ per share. It's at least 13% more. Does it simply mean that WD hopes that SD will rise in value rapidly? Or I im…

There are two main ways to buy a public company. One way is to make a deal with the board of directors which gets ratified by the shareholders in a vote. Because stocks are highly liquid you really have to offer a premium over the current stock price for that to be a good deal for everyone involved. Then think about what happens after the board agrees to the sale, people can still trade their stocks on the open market, but it'll be a vastly different landscape than normal because those stocks now have a fixed price at a future date. So it doesn't make sense to buy stocks at higher than that price, it also doesn't make much sense to sell stocks at lower than that price unless you need liquidity now.

The other way is to just buy up a majority of the public, voting shares, typically called a hostile takeover. This is the hard way, and can become extremely expensive if enough people decide they don't want to part with their shares except at very high prices. As you buy up shares the price will go up, so it ends up being a longer, more difficult, less certain, and more contentious way to buy a company.

Re: Western Digital agrees to buy SanDisk for about $19B

#47

Post by Sophistifunk »

digitalzombie wrote: post #7
sschueller wrote: post #3

This sucks for consumers. Prices are already way to high for HDs and don't seem to come down anymore. It is as if there is some sort of price fixing going on.

Yeah seriously, SanDisk own patents to flash IIRC, their stuff is always less than their competitors. I hope WD isn't going to jack up prices.

They probably won't. SanDisk already make the most expensive flash drives, as well as cheaper consumer models. But I have a couple of their top shelf drives, like the "Extreme Pro" USB3 stick. They're stupid fast, and worth every penny, assuming it has a long life.

Re: Western Digital agrees to buy SanDisk for about $19B

#48

Post by eveningcoffee »

skrause wrote: post #34
hga wrote: post #14

Earlier quoted context omitted.

Hmmm, when did the price decreases stop? I last bought some high capacity drives in 2011 just before the floods in Thailand zapped the industry, and I now note I can buy twice the capacity, 2TB -> 4TB, for $35 less. There could be demand issues, as companies like Amazon, Google, Backblaze, etc. etc. buy them in mass quantities to offer redundant cloud storage. At the other end, SSDs have got to be eating the lunch of…

Here is a nice list of historic hard disk prices (1955-2015): http://www.jcmit.com/diskprice.htm

Very interesting.

What we see is that when we look at cost per MB ratio (price/MB) then it tends to go down exponentially. This happened from the beginning till 1975 when something happened so that the prices rose even above the initial levels in 1956.

But then it goes back down exponentially and it flattens around 1985. When we zoom in then we see that it continues to go down and then flattens around 1995.

The fall now accelerates as the ratio flattens already in 5 years.

Now when we move forward into into 2010, we see then continuation of the fall till sudden spike in 2012 when the ratio raises back to 2010 levels and then continues to fall and reaches the pre 2012 levels in 2014.

After 2014 the ratio still continues to fall.

Edit: So in cost per MB, we start with tens of thousands of $ per MB and reach tens of $ per MB in 1985.

Then reach tens of cents per MB in 1995 and in 2010 we have tents of cent per MB.

Re: Western Digital agrees to buy SanDisk for about $19B

#49

Post by hga »

eveningcoffee wrote: post #48
skrause wrote: post #34

Earlier quoted context omitted.

Here is a nice list of historic hard disk prices (1955-2015): http://www.jcmit.com/diskprice.htm

Very interesting. What we see is that when we look at cost per MB ratio (price/MB) then it tends to go down exponentially. This happened from the beginning till 1975 when something happened so that the prices rose even above the initial levels in 1956. But then it goes back down exponentially and it flattens around 1985. When we zoom in then we see that it continues to go down and then flattens around 1995. The fall…

The 2012-2014 spike was due to an act of God: https://en.wikipedia.org/wiki/2011_Thailand_floods#Damages_t...

I read there was a lot of supply chain damage as well, part of why general recovery for industry took two years.

Re: Western Digital agrees to buy SanDisk for about $19B

#50

Post by toyg »

cdr wrote: post #22
toyg wrote: post #19

Earlier quoted context omitted.

Physical disks are not going down in price because their market volume is shrinking, their technology is just not evolving. On consumer machines, the 5400rpm drives are being replaced by other 5400 or by SSDs, not by 7200rpm. So the 5400 disks don't go down in price, whereas SSDs do (albeit slowly, due to technological constraints).

I'd say SSDs are going down in price pretty dang fast. The technology is advancing far more rapidly than HDDs could ever dream of. The Samsung 850 EVO 500GB is already ~25% cheaper than the equivalent 840 was a year ago, with better performance. Not to mention the high performance NVMe drives we're starting to see, where the price:performance is even better.

i think the main parameter people judge price reductions for disks is "$ per GB", rather than anything related to performance. SSDs are getting better and faster, but the price per GB is not exactly crashing.
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