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Newegg Clarifies Its Intel SSD Price Increase

By - Source: Tom's Hardware US | B 54 comments
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It's just Economics 101.

Earlier this week we noticed that Newegg's prices for Intel SSDs were much higher – in some cases, more than twice as much – than the manufacturer's suggested retail price. (See the original story here.)

Newegg has responded to our inquiry regarding the price with the following statement:

"Thank you for bringing this to our attention, we sincerely apologize for any inconvenience this has caused.  We are aware of this issue and we are working exclusively with Intel to provide these products in greater numbers to meet the growing consumer demand.  We apologize again for the inconvenience and we would like to assure you that providing the best online experience possible is our top priority."

Clearly the price increase is tied to supply and demand. With the recent surge in demand for Intel SSD parts, the dwindling stock at Newegg has driven up price.

Intel PR manager Dan Snyder told Tom's Hardware, "Intel has not raised distributor pricing but the demand for 34nm SSDs is outstripping supply, which Intel is addressing. We cannot speak to pricing strategy at specific etailers."

Have you been hot for an Intel X25-M SSD lately?

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Top Comments
  • 17 Hide
    curnel_D , September 4, 2009 8:21 PM
    gorehoundmaybe it is timne not to shop there.that was/is a very lame thing to do to consumers.

    Almost EVERY retailer will do the same. It's called supply and demand and has been a staple in the smart business practice for thousands of years.

    And besides that, it was very likely under automated control anyways. newegg.com has hundreds of thousands of different products to sell. It cant keep a greedy eye on every single one of them.

    Get over it.
  • 13 Hide
    hellwig , September 4, 2009 8:03 PM
    Quote:
    We are aware of this issue and we are working exclusively with Intel to provide these products in greater numbers to meet the growing consumer demand.

    In other words: "yes, we increased the price because we had limited quantities available."

    I wonder if Newegg's system was setup to automatically increase the price when stock fell below a certain limit. I'm not sure what Newegg would need to "work" on, just lower the price back down.
Other Comments
  • 0 Hide
    vgdarkstar , September 4, 2009 7:10 PM
    I just bought mine today, I would have from Newegg, but they're out, got it elsewhere.
  • Display all 54 comments.
  • 13 Hide
    hellwig , September 4, 2009 8:03 PM
    Quote:
    We are aware of this issue and we are working exclusively with Intel to provide these products in greater numbers to meet the growing consumer demand.

    In other words: "yes, we increased the price because we had limited quantities available."

    I wonder if Newegg's system was setup to automatically increase the price when stock fell below a certain limit. I'm not sure what Newegg would need to "work" on, just lower the price back down.
  • 17 Hide
    curnel_D , September 4, 2009 8:21 PM
    gorehoundmaybe it is timne not to shop there.that was/is a very lame thing to do to consumers.

    Almost EVERY retailer will do the same. It's called supply and demand and has been a staple in the smart business practice for thousands of years.

    And besides that, it was very likely under automated control anyways. newegg.com has hundreds of thousands of different products to sell. It cant keep a greedy eye on every single one of them.

    Get over it.
  • -8 Hide
    grieve , September 4, 2009 8:28 PM
    Curnel_DAlmost EVERY retailer will do the same. It's called supply and demand and has been a staple in the smart business practice for thousands of years. And besides that, it was very likely under automated control anyways. newegg.com has hundreds of thousands of different products to sell. It cant keep a greedy eye on every single one of them.Get over it.

    I do agree with you... however they doubled the price of this item, they didn't raise the price 10%. Where do you draw the line?
  • 2 Hide
    Major7up , September 4, 2009 8:29 PM
    Sounds like a dodgy response to a direct questions. Hell yeah they raised teh price, hell yeah the want to take advantage of the situation...they are a business after all. All we can do is wait or buy it elsewhere.
  • 6 Hide
    jellico , September 4, 2009 8:32 PM
    gorehoundmaybe it is timne not to shop there.that was/is a very lame thing to do to consumers.


    These type of posts get really tiresome. Look, it really is economics 101: if supply goes down, then price goes up. It is just that simple. Put it another way... let's say you won some tickets for a really hot, sold-out concert, but for a band you don't really like. Are you going to sell those tickets at face value, or are you going to sell them to the highest bidder? If you were to find an old comic book in your closet, then you come to learn it is particularly valuable because it was a limited print run, are you going to sell it for the 25 cents it originally cost, or are you going to sell it for the current market value?

    One last example... let's say you own an online store. Your prices are normally very low and you move a lot of inventory. But this new item, the Widget Pro 2000 XLR, is a pretty hot selling item and your supplies are starting to run low because the manufacturer isn't making them fast enough. Do you sell at the current price and get bought out by a competitor, or do you raise your prices to current market value?

    Businesses exist to make money. They aren't there to provide people with jobs and benefits, or to help consumers (which is not to say that those aren't natural results of running a business, it's just not the REASON you are in business). This is not a bad thing. However, if you find it unpaletable, feel free to shop somewhere else... that is YOUR greatest freedom and power as a consumer.
  • 3 Hide
    jellico , September 4, 2009 8:43 PM
    grieveI am certain this is what Westjet does. (A Canadian Airline)I have noticed as the seats become more sparse, prices increase. This is the same concept (supply and demand), different industry. I think there should be laws in place to protect consumers from price spikes. I paid $2.90 for a bag of ice @ the lake last weekend... I will never understand how ice is so expensive! It's fuckin Ice! and we aren't in a desert.

    Actually, airlines have an even more clever business model. They allow flights to be booked far in advance and offer "discounts" because they know that most people who would book that far ahead are travelling for leisure, and are looking for a good deal. Once they reach the point where they have enough passengers booked to cover the cost of the flight, then their prices stablize to the "normal" rate. As the departure date approaches, the prices for the few remaining seats increase dramatically. The reason is because they know that most people booking last minute travel are business flyers who have to get where they are going and aren't concerned about the higher cost because a) their time is more valuable, b) the company is paying the expense and/or c) they or their company get to write-off the cost of the flight anyway.

    And... there's absolutely nothing wrong with that business model (nor the recent trend of charging for checked luggage). It's just business. And like all other businesses, the airline industry exists to make money (or to try anyway).
  • 8 Hide
    tayb , September 4, 2009 8:47 PM
    grieveI do agree with you... however they doubled the price of this item, they didn't raise the price 10%. Where do you draw the line?


    There is no line. If the demand keeps going up the price keeps going up. If their price increase resulted in a decrease in demand the price will begin to fall. That is how supply and demand works.
  • 0 Hide
    tkgclimb , September 4, 2009 8:57 PM
    Man those look nice, wish i could get me one.
  • 4 Hide
    Greg_77 , September 4, 2009 8:58 PM
    To all of you who are upset at the price hike: don't buy the product from them or purchase it somewhere else. It's that simple. No one forced you to buy the product. Obviously, people are willing to pay the higher prices. Why would a company not maximize its profits? Why do you think gold is so expensive? Low supply coupled with a comparatively high demand. Their is no "correct" price for anything.
  • -7 Hide
    tpi2007 , September 4, 2009 9:06 PM
    I always wonder why you would call this case economics 101.

    I can guess that in an airline, if everybody buys in advance they should get a discount because that will enable the airline to better program a flight and also put that money in the bank or to good use in advance. If everybody buys at the last minute they should pay more because that will mean the airline has to schedule the following at the last minute which brings inconveniences because of that: more fuel, more food and drinks, the check-in personel is going to have to work more, the luggage guys too, etc.

    But a site like Newegg ? Come on! The stock runs out, they send an e-mail/fax/phone call, etc to Intel saying they are having more demand and asking for more. Period!

    If Intel has to go out and contract more people in a rush to face demand and that burocracy temporaily increases the price on the ssd's then Intel will reflect that on the NEXT batch they send to Newegg. The current batch was bought at a particular price, and not content with that price not being particularly cheap, Newegg decides to make more money out of peoples need to have one.

    This is not economics 101, it's greed.
  • 0 Hide
    Anonymous , September 4, 2009 9:12 PM
    There are plenty of ways for companies to abuse consumers: Hidden fees, deceptive advertising, not paying out on warranties, un-authorized charges, etc...
    Simply raising prices is not one of these. Companies can and should be allowed to raise prices on most goods in most cases, If you feel that the price is too high then don't pay it, but it is silly to get angry over it or to hold a grudge. (Exceptions may occur in cases of supply or demand shocks on essential goods or when the company has a natural or unnatural monopoly).
  • 1 Hide
    rooket , September 4, 2009 9:41 PM
    80 gigs is just not enough for me, but I can understand using it as a boot drive. But even when I have a 75gb raptor as boot it just is barely enough for C:\ they can raise the price all they want, I wouldn't pay even $100 for an 80gb of anything.
  • 1 Hide
    neosoul , September 4, 2009 9:42 PM
    +1 on the automatic price configuration. Though Newegg is no longer 'the little guy', their prices are still far superior than retailers for most items. Like a previous poster said, if you don't like the price, go somewhere else. Even when it was the preferred E-tailer, I still bought items at other places.

    Don't turn the other cheek as soon as there is a mis-step. I strongly believe it's online places like this that brought unfair prices at OTHER places down.
  • 0 Hide
    zerapio , September 4, 2009 9:45 PM
    jellicothere's absolutely nothing wrong with that business model (nor the recent trend of charging for checked luggage). It's just business.

    I do have strong beef with airlines charging for checked luggage. The reason is that it feels like I'm being punished for something (carrying luggage) that is the most common situation. It is like selling you a hot dog and charging for the napkin, the condiments, etc.

    I prefer a model that uses rewards. If passengers only has one luggage they get a small discount and if they only have carryons then a bigger discount. The airlines can adjust the numbers so both models are economically the same. The result is that I feel encouraged to travel light but don't get pissed off if I can't.
  • 0 Hide
    NocturnalOne , September 4, 2009 9:58 PM
    While I think NE is perfectly in their right to charge whatever they feel like for their products I think this is a lame response. "We apologize again for the inconvenience" and all that? Nonsense. Whoever wrote that needs to grow a pair and simply state the obvious. Something like "this is what we feel the current market price is for this product.". No meaningless apologies. There is no need to apologize so don't. This just sounds weak and insincere. Frankly the statement did more damage than the price increase did. If they feel they *have* to apologize they could say "we're sorry that this price increase puts the product out of reach of some of our customers. We hope that stock will increase again soon so that we can maybe lower prices again."

    Everyone does price shopping (or at least they should) and choose the price/merchant combo they feel provides the best value. That's not always the cheapest, mind you. Sometimes it's worth spending more at a reputable vendor rather than some unknown e-shop that might hand your CC to the highest bidder in Farawayistan. Sometimes it's worth sending your fave e-tailer a message by not buying your next upgrade there.

    Lame newegg, lame.
  • -2 Hide
    fuser , September 4, 2009 10:03 PM
    I'm surprised newegg hiked the price up so high. They're taking a big risk with this pricing strategy.
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