It must be noted that Ampex has been able to advance the KM+MR ball while operating with a R&D budget that while, as a percentage of sales is impressive, is really a shoestring budget relative to the disk drive industry mean. In other words, they have been able to advance their program despite the handicaps.
For instance, I remember Glenn Perry talking about the Data Storage article that describes how Ampex was using sample keepered disks that involved the application of the keeper layer on top of the finished disk in a separate process. The state of the art machines sputter the various thin films on the disk in a continuous vacuum deposition process to avoid contamination. There is also the question of access to a supply of production quality MR heads, which have been in short supply for some time. By definition, testing involves using different combinations of the variables I mentioned before to determine the optimum combination for a particular head design.
All that may help explain why Ampex is now changing its stragegy and is looking for a partner to accelerate the process even faster. As you recall, they went to Quantum, WDC and Maxtor first because they had basically a finished KM+TFI product and were looking for a motivated player to roll out KM+TFI. They chose Maxtor. It sounds to me that Maxtor has everything it needs to roll out KM drives later this year, but, as a response to what at this point of time looks like an improving supply of MR heads, Maxtor is now hedging its bets by preparing a more aggressive MR drive program.
Maxtor Corporation, a disk drive manufacturer with which Ampex has previously announced an agreement to utilize keepered media, has advised the Company that its preference is to switch future programs from inductive to MR-based designs, provided that a sufficient quantity of MR heads becomes available..
Note that KM was never meant to be more than a source of a few million dollars worth of royalties this year. By the way, Trend Focus had this to say about the MR-TFI mix this year (see below). Less than half of the heads shipped will still be TFI. We still have a chance of getting a couple of mil from KM this year, a slim chance, but its there.
techweb.cmp.com
"1997 will be the year of MR heads," said Mark Geenen, president of TrendFocus Inc. (Palo Alto, Calif.). "By the end of the year, more than half the heads shipped will be MR."
What I think is even more important is this part of the 10Q....
Ampex has discussed its recent test results of keepered media with MR heads with certain potential customers, and expects to present the data to additional disk drive and component manufacturers in the near future. In order to attempt to
accelerate the commercial deployment of keepered media in MR disk drives, the Company has provided samples of keepered media disks that are optimized for MR heads to two integrated manufacturers of disk drives,and is in discussion with respect to joint development programs that, if successful, would target the introduction of an MR-based disk drive program utilizing keepered media during 1998. These discussions have not, to date, resulted in any definite proposal, and the Company does not expect to generate any revenue from keepered media with MR heads in the current fiscal year.
There are only 2 vertically integrated players in the top 5: IBM and Seagate. I am wondering, and this is about as close as I can get to wild speculation, if this time, Ampex is willing to play a card that has always been available to it: exclusive use of KM for, say, 3 years.
MR looks poised to be in use for a much longer time than that anyway. Why not take a couple of steps backwards on the path towards making KM an industry standard in order to get several generations of commercially shipping keepered MR drives under the belt before moving forward? An IBM or a Seagate would be in that position because they both have a very developed capabililty to make most of the different components of a disk drive. Whatever its commercial value may ultimately be, KM may be more attractive to one big player if he knows he is the only one who has it, if only for a while. Is this a gamble that's worth taking? Is it even necessary?
Bramson is navigating a very tricky course here with a technology field that is constantly shifting. I am confident that he can chart a course here. All that I have read from him (and the fact that he's has a lot of his net worth tied to this company's fortunes) suggests me that he is hip to what that Santayana dude said about the past. For the speculative part of my portfolio, that's good enough. |
