Supply chain wars are a part of life in the DD industry, actually, so I won't read too much into the Seagate comment. Let's review the bodycount so far. Stormedia, the number 3 media supplier, went into Chapter 11 in 1998. Applied Magnetics, the number 2 US recording head supplier, went into Chapter 11 in 2000. HMTT, the number 2 media supplier, merged with Komag, the number 1 media supplier, in 2000 just in time for the combined company to go into Chapter 11 in 2001. Komag came out of bankruptcy court in 2002. ReadRite, the number 1 US recording head supplier, went into Chapter 7 this year and sold its key assets to WDC. Hutchinson continues to threaten to be a single-source of suspensions so much so that Seagate has had to keep Innovex on life support with some drive programs. Marvell came out of nowhere to grab market share from the other channel electronics players whose product development pipelines were weakened by the ritualistic price wars of the DD makers. I daresay the DD makers have actually managed to run out of bodies to even promote a spitting contest among its suppliers.<g>
I took profits and swapped most of my components (equity) for drives (options) because I wanted to increase my exposure to enterprise storage (HILL, NENG, ADIC) while retaining exposure to the revaluation of the disk drive supply chain. There will be a time to rotate back into the component makers but for now, everything depends more on responsible disk drive maker behavior than anything else. More rational disk drive maker behavior means more positive press. More positive coverage means more demand for the equity and eventually, expanded multiples......
Storage Business Looking Up
By Mark Hachman
September 15, 2003
SAN JOSE, Calif.—The disk drive industry is happy. Cautious, but happy
After weathering years of price declines, cutthroat competition and questions about whether customers actually needed all the storage manufacturers had to offer, vendors can afford to breathe a small sigh of relief.
Drive shipments are expected to grow from 225.4 million units this year to 239.7 million units in 2004, according to John Donovan, vice president at market researcher Trend/Focus Inc. However, both analysts and manufacturers alike expect a sharp 19.4 percent increase in 2.5-inch drives from this year to the next, as the IT world shifts more of its workforce to notebook computers.....
eweek.com |
