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The price war for your notebook storage: 128 GB SSD vs. 500 GB HDD

We are reading more and more about how SSD pricing continues to drop and subsequent attach rates for notebook PCs continue to rise. It has been a wild ride to see how aggressive some pricing has been over the past year, favoring the rise of SSD attach rates with each passing quarter. It gets even more interesting next year when a 128 GB SSD becomes the same price (approximately) as a 500 GB HDD. We have always held the firm belief that the consumer notebook PC market (about 60% of all notebook PC’s shipped each year) is dominated by price and capacity when it comes to someone buying a new computer.

Price is pretty self explanatory. When someone walks into a store or goes online, they have a ballpark dollar amount they are willing or able to spend.  We estimate that over 60% of the all notebooks sold are below $700, and a good portion of these are even at or below $400. Within this bill of materials (BoM), HDDs have been the storage technology of choice, with 500 GB HDD priced in the sub-$38 range for sometime now. The key here is the 500 GB capacity point. It has been the sweet spot capacity point for PCs for multiple years now.

Enter 128 GB SSD at the same price…. What happens now? Do the majority of consumers switch, en-masse, over to the notebook PC with an SSD inside (at 128 GB?) I would still maintain the answer is no. Remember that most systems with an SSD (which by itself is faster than an HDD) are going to have additional technologies and features integrated around them (like a faster processor or a thinner z-height system). These other attributes translate to a higher price to the end user. But let’s assume the notebook vendors make a clean swap of the 500 GB HDD for a 128 GB SSD, and don’t raise the price with the added technologies and features that go with the SSD, would you still buy a notebook system with 128 GB of storage when the current system you are replacing is most likely 500 GB? In the consumer segment some may opt to use of the cloud or an external HDD for backup storage, and thus do not need the higher capacity the HDD has to offer. Although this may be true for some users, it has not been the norm.

This theory will be put to the test in 2016 when 128 GB pricing reaches parity with a 500GB HDD. We will then see if the consumer notebook market buying behavior will evolve – will price and capacity for one system continue to be the standard for the consumer notebook market – or will smaller but faster performance sway the decision?

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