Hard Drives and Gas Prices

I’ve been thinking today about hard drive prices and shipping/transportation costs to Las Vegas.

It can’t be cheap to fly fresh seafood into the middle of the desert on a daily basis, yet every big hotel has an all-you-can-eat steak and seafood buffet. I heard a story on NPR about how Las Vegas is trying to push for a more balanced economy instead of one that relies so heavily on entertainment, but my guess is that Las Vegas has hit it’s current economic stabilization point for a reason. It’s going to be hard to bring in businesses to such an inconvenient location when they don’t have the same thing going for them that casinos have going for them, namely having throngs of tourists visiting with the intention of leaving behind non-trivial chunks of expendable income.  Unless it becomes a hot spot for plastic surgery or massive numbers of cheap IT datacenters, I don’t see explosions of industry happening there.

I have a similar concern about hard drive prices and the effect of a spike in price is going to have on the proliferation of cheap online storage. (I’m looking at you Mr. “The Cloud”)  AWS, App Engine Datastore, Hadoop, etc… these are projects that rely heavily on being able to throw mountains of inexpensive disks in to keep costs low and do interesting things with large datasets.  I’m sure that when you’re purchasing hardware to build out datacenters, any small fluctuation in price can have a sizeable impact on cost projections.  Given the online economic climate, I think that passing along these price increases to the customer would tarnish the relationship with the stereotypically cash-strapped yet still essential small to medium-sized business segment.

Don’t get me wrong, I don’t think anything’s going to change or go away. I just worry about the various companies and enterprises that depend heavily on the high availability of low cost hard drives and cheap shipping to Las Vegas.  I know it’s a small market, but just today over lunch, I was talking about how online storage is so cheap and will continue to be so. I hope pricing hiccups over the next 18 months don’t trickle through and prove me wrong.