I've just picked up an interesting book called the Inovator’s Dilemma by Clayton Christiansen. This book talks about industry cycles and the important differences between companies that work on sustaining and disruptive technology. Sustaining technology is the obvious brass ring for a company to exploit their market and satisfy their customer's need, but disruptive technology is what builds business opportunity and ultimately leads to new markets. In fact, disruptive technology usually takes over the markets previously held by the sustaining technology or incumbent business, very often putting these established companies in their graves.
Anyway, to develop the theory, just as scientists study fruit flies because their life spans are short, this economist studies disk drive companies – the fruit fly of the business world. Christiansen tracks the moves from 14 inch to 8, to 5 1/4 and 3 1/2. He talks about shifts from thin film to MR, etc. He talks about Seagate and how it was started on 5 1/4" technology that was disruptive to the 8" mini-computer sustaining technology of the time, and how Seagate totally missed the boat on 3 1/2". Seagate would have bought Conner to regain position, and therefore survive a typical moment that kills many companies left holding market position in the previous technology.
So, the question is does the Oligopoly theory hold water, or is there a disruptive technology that waits to bring down the house of Seagate? Is this the biggest joke of all in this buyout and IPO? Is there any business in 3 years if they fail to command the next disruptive technology?
If IBM sells their drive business to Hitachi, will they hold onto the 1" form factor? Is this form factor a disruptive technology, or is it simply smaller? History would say that it is the next place to win. Seems too simple though to place faith in smaller disks.
What about these companies that were suppose to change the landscape using lasers to pinpoint the write area and therefore pack much more density onto a platter? Is it a new head technology? Is it a change away from drives to other media?
If history tells anything, it probably won't be Seagate that takes the next disruptive technology to market. They may be able to react, buy in, etc, but in a industry that has shown continuous collapse of the reigning technology companies, is it valid to buy an IPO for the leader of a historically unsustainable market? Certainly sounds like a poor “investment”, but a great game for the quick and brave.
Regards,
Mark |
