Granted that an integrated business takes a lot more ppe than the virtual one, the SEG trend is still heading in the wrong direction.
SEG continues to increase the number of units shipped -- now over 10 million disk drives a quarter -- but revenues continue to decline, although, not as fast as previous quarters. WDC and HDD have the same problem. As you know, SEG, WDC and HDD controlled about 80% of the market at the peak of the last cycle, but it has been downhill ever since. In contrast, IBM exceeded SEG in terms of revenues in 1998, though not in terms of units. Fujitsu continues its market share strategy and Maxtor is probably the hottest desktop drivemaker -- with one analyst expecting it to grab as much as 20% of the higher-margined NAS market -- as the industry slowly comes out of the worst downturn in its history. Truly contrasting trends that do not tell much about the vertical vs virtual debate, but do validate the importance of smart and timely product development.
Some of us expected that a former investment banker, with a golden rollup under his belt, at the helm of the largest disk drive manufacturer and the dominant enterprise drive vendor would be able to, at the very least, align the key component suppliers (heads and media) in order to increase the barriers to entry to this industry and dampen this industry's persistent tendency towards overcapacity that basically renders most of those financial ratios almost meaningless because of the PC box-maker-reinforced "last man standing" nature of the price competition. But how were we to know that he was too busy preparing rather elaborate plot to enhance shareholders value instead.<g>
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