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Technology Stocks : Disk Drive Sector Discussion Forum
WDC 157.33-5.3%2:48 PM EST
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To: Z Analyzer who wrote (8102)3/16/2000 8:25:00 PM
From: Stitch  Read Replies (4) of 9256
 
Z, Mark;

<<Mark:I wonder if the costs of glass platters will offset the savings in fewer components.>>

The cost differential between glass and aluminum substrates has been narrowed substantially to roughly 12% making a finished glass blank come in around $3.25. This isn't enough to offset the cost savings of reduced component counts.

<<Z: When do the laws of diminishing returns begin to apply?>>

I think one of the arguments we have seen here has been that we have passed that point but that is a PC-centric point of view, of course. I do not think there are any diminishing returns from the accelerated density curve in terms of market growth and the introduction of new applications. At least there are none until we hit the so-called paramagnetic limit that is theorized today to be around 100Gb/psi. I believe the run up in DD stocks comes from the growing awareness of the growth potential for non-PC storage coupled with signs of a robust PC market to carry us for a while (WIN-2000 et al) and a marked improvement in managing inventory and factory output. Still, I do not think we are going to see a repeat of gross margins similar to what the industry had before this downturn began two and half years ago. The real question is who is going to thrive on 10-12% gross margins.

Best,
Stitch
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