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The post struck me as slightly unprofessional, but from a technical standpoint I don't see anything that would change my opinion of the service they provide. T

by aes256 14y ago

The post struck me as slightly unprofessional, but from a technical standpoint I don't see anything that would change my opinion of the service they provide. They achieve the best bang for buck by using ordinary consumer hard drives in RAID arrays. During the hard drive crisis, the cheapest way of procuring these was by purchasing external drives from ordinary stores. There's nothing wrong with that. If anything, it shows agility and ingenuity.

yock 14y ago
And, I would add, intense vulnerability to future market fluctuations. If this was their contingency plan, they've exhausted it. What happens next time?
- jws 14y ago
  Did you miss the part where they had a month's supply and the option of just paying more on the OEM market? This is just how they made best use of the market by going to nontraditional channels, not their only option.
- aes256 14y ago
  This was a one-off event that I'm sure the hard drive manufacturers themselves will be taking steps to prevent reoccurring. What else can Backblaze do? Stockpile drives? The hard drive industry moves fast, with major product releases every 6-12 months and constant price reductions; this would almost certainly increase the cost to the end user. No business can adequately prepare for a supply shock like this. Imagine airlines facing a 300% increase in the price of fuel. Almost every single one would go out of business. In this case, would you be berating the ingenious airline that goes out of its way to track down fuel at a cheaper price, finding a low-cost fuel that they can easily refine themselves to aviation fuel, so as to honour their commitments to their customers and avoiding raising their prices?
  - anonymouz 14y ago
    > Imagine airlines facing a 300% increase in the price of fuel. Almost every single one would go out of business. No. They use hedges to control their cost (this is the original point of hedging...). If a company is reliant on a constant supply of hard-drives and doesn't want to be exposed to the risk of extreme price jumps it should probably do the same.
    - jws 14y ago
      Airlines have long term fuel contracts to smooth out the short term price changes, but beyond that they just pass it on to consumers. e.g. http://www.delta.com/business_programs_services/delta_cargo/current_surcharges/index.jsp http://www.delta.com/business_programs_services/delta_cargo/... the first column is the fuel surcharge that floats with fuel prices. The Backblaze article clearly said that paying more for drives and passing it on the customers was an option. They just found a better one. They didn't mention it, but just losing money for a while is also a reasonable option if you don't want to antagonize your customers.
      - deleted 14y ago
        [deleted]
      - atYevP 14y ago
        *Yev from Backblaze here -> You're correct, but quick note on this. We're a boostrapped startup, meaning, we need to be constantly profitable in order to pay salary and keep the business going, taking a financial hit was the only real option we could not take, because we would have been out of business very quickly (not good for anyone).
    - mikeash 14y ago
      Hedges hit you both ways, though. They save you if prices spike, but also cost you if prices drop. Given that hard drive prices almost always drop constantly, is that tactic really a good idea? Is it possible to reasonably hedge against price spikes in a commodity whose price you expect to consistently and rapidly drop? (Serious questions, really.)
  - bruceboughton 14y ago
    In what real-world scenario would airlines respond to a short-term rise in the cost of fuel by finding a new low-cost fuel and refining it themselves to fuel engines designed and tested with existing fuels?
    - aes256 14y ago
      Obviously I'm no expert on aviation fuels, I'm just trying to make an equivalent (most probably fictional) scenario for the industry. In this case internal drives are ordinary aviation fuel, external drives are the alternative fuel, the price of which has been largely unaffected by the supply shock, and the process of taking the external drives apart to reveal internal drives is the equivalent of a simple refining process that turns the alternative fuel into ordinary aviation fuel.
- kokey 14y ago
  This sort of thing happens all the time in business. There are a variety of common solutions, for example borrowing and repaying once prices are back to normal again, throttling demand in other ways, raising prices to the customer, cutting costs in other parts of the business, etc. All of those affect the value to the customer in some way. They managed to find a creative way to limit that effect. In the end, they are cheap, if you are worried about their methods I'm sure they have competitors who approach things in a more traditional fashion and charge accordingly.

by aes256 14y ago

yock 14y ago

And, I would add, intense vulnerability to future market fluctuations. If this was their contingency plan, they've exhausted it. What happens next time?

jws 14y ago
Did you miss the part where they had a month's supply and the option of just paying more on the OEM market? This is just how they made best use of the market by going to nontraditional channels, not their only option.
aes256 14y ago
This was a one-off event that I'm sure the hard drive manufacturers themselves will be taking steps to prevent reoccurring. What else can Backblaze do? Stockpile drives? The hard drive industry moves fast, with major product releases every 6-12 months and constant price reductions; this would almost certainly increase the cost to the end user. No business can adequately prepare for a supply shock like this. Imagine airlines facing a 300% increase in the price of fuel. Almost every single one would go out of business. In this case, would you be berating the ingenious airline that goes out of its way to track down fuel at a cheaper price, finding a low-cost fuel that they can easily refine themselves to aviation fuel, so as to honour their commitments to their customers and avoiding raising their prices?
- anonymouz 14y ago
  > Imagine airlines facing a 300% increase in the price of fuel. Almost every single one would go out of business. No. They use hedges to control their cost (this is the original point of hedging...). If a company is reliant on a constant supply of hard-drives and doesn't want to be exposed to the risk of extreme price jumps it should probably do the same.
  - jws 14y ago
    Airlines have long term fuel contracts to smooth out the short term price changes, but beyond that they just pass it on to consumers. e.g. http://www.delta.com/business_programs_services/delta_cargo/current_surcharges/index.jsp http://www.delta.com/business_programs_services/delta_cargo/... the first column is the fuel surcharge that floats with fuel prices. The Backblaze article clearly said that paying more for drives and passing it on the customers was an option. They just found a better one. They didn't mention it, but just losing money for a while is also a reasonable option if you don't want to antagonize your customers.
    - deleted 14y ago
      [deleted]
    - atYevP 14y ago
      *Yev from Backblaze here -> You're correct, but quick note on this. We're a boostrapped startup, meaning, we need to be constantly profitable in order to pay salary and keep the business going, taking a financial hit was the only real option we could not take, because we would have been out of business very quickly (not good for anyone).
  - mikeash 14y ago
    Hedges hit you both ways, though. They save you if prices spike, but also cost you if prices drop. Given that hard drive prices almost always drop constantly, is that tactic really a good idea? Is it possible to reasonably hedge against price spikes in a commodity whose price you expect to consistently and rapidly drop? (Serious questions, really.)
- bruceboughton 14y ago
  In what real-world scenario would airlines respond to a short-term rise in the cost of fuel by finding a new low-cost fuel and refining it themselves to fuel engines designed and tested with existing fuels?
  - aes256 14y ago
    Obviously I'm no expert on aviation fuels, I'm just trying to make an equivalent (most probably fictional) scenario for the industry. In this case internal drives are ordinary aviation fuel, external drives are the alternative fuel, the price of which has been largely unaffected by the supply shock, and the process of taking the external drives apart to reveal internal drives is the equivalent of a simple refining process that turns the alternative fuel into ordinary aviation fuel.
kokey 14y ago
This sort of thing happens all the time in business. There are a variety of common solutions, for example borrowing and repaying once prices are back to normal again, throttling demand in other ways, raising prices to the customer, cutting costs in other parts of the business, etc. All of those affect the value to the customer in some way. They managed to find a creative way to limit that effect. In the end, they are cheap, if you are worried about their methods I'm sure they have competitors who approach things in a more traditional fashion and charge accordingly.