EMC How high can it go? Message Board

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Technology Stocks : EMC How high can it go?

EMC 29.05

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Sep 15 5:00 PM EST

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To: Sam Citron who wrote (15282)	9/16/2003 3:23:45 PM
From: Gus	of 17183

Yes, it matters because of volume economics. Seagate, for example, manufactures more than 80% of its own heads and platters. If my memory serves me right, the current ASP for a recording head is $5-$7 while a single-sided platter sells for around $4-$6 so the total combo is $9-$13 per single-head, single-platter drive. The Japanese are no longer 10 feet tall in electronic manufacturing. That is to say that they are not that efficient that they can still be competitive in the drive biz if they don't make their own heads and platters because Seagate will always have a 20% to 30% cost advantage over them in heads and platters alone! Since Seagate already commands 30%-35% of the high-volume desktop and 55%-60% of the high-margin enterprise, every 10% of market share that Seagate gains in the mobile drive business is practically a springboard to another 10% share in 18 months or less because of that distinct cost advantage. Since PC OEMs generally like to pit their drive makers against each other, you can expect WDC and MXO to follow in Seagate's footsteps since they also have the major advantage of spreading out their fixed costs over more units.

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