It seems that only a year ago terabyte hard drives were a novelty item. Today they are on clearance at computer stores trying to free up the shelves for 1.5Tb drives and the 2Tb hard drive is just a few months away from hitting retail. Conventional wisdom is telling us that older, smaller-capacity hard drives are rapidly dropping in price, but is it really so?

Over the past year we’ve been tracking hard drive prices for various models from retailers all over the world. The cost of older models of hard drives is going down as expected, but not nearly as dramatically as some of us have thought. There are also relatively brief but substantial spikes in the cost of hard drives. In the past year these spikes closely corresponded to the drops in the value of the US dollar. This trend is expected for computer parts and other electronics, most of which is manufactured outside the US. Retailers were forced to counter by lowering prices and absorbing the extra costs.

The chart below shows the average monthly price of a generic 500Gb 7200RPM internal SATA drive from June 2008 to June 2009. During this twelve-month period, the average cost of this type of hard drives declined about 20%.

The following chart shows the average monthly price of a high-performance 74Gb 10,000RPM internal SATA drive for the past year. Such relatively low-capacity high-speed hard drives, usually used for operating systems, maintain their value slightly better than 7200RPM drives more commonly found in home PCs. This 10,000RPM hard drive lost 16% in price over the past year.

The chart below is for a high-end consumer electronics product: the Yamaha Tyros 2 musical arranger keyboard. The V-shaped price curve during the past twelve months is characteristic for expensive, specialty electronic products. The Yamaha Tyros 2 only lost 5% of its cost since June of 2008, despite being succeeded by the new and improved Tyros 3 that costs only a few hundred dollars more.