Way back on the thread an article was posted which gave the figure of 20 cents an hour. Someone also quoted Mitchell as saying the cost of labor is negligible, and thus layoffs would not be necessary when capacity was lowered due to a production problem. I'm not sure if he quoted Mitchell as giving this 20 cent per hour figure as well.
Also, the Asian "Tiger" economies which suffered the currency drops are well organized, hi tech economies which will lead to much higher currencies and wages over time. I don't believe that India recieves nearly as much foreign investment, and as a result wages should increase more slowly.
As far as margins go, of course this is not good news in the short term, but remember JTS still has the labor cost advantage. Much more important is whether or not JTS will fill up their capacity, will they sell the 3" drives (and if so will they be at higher margins), and will JTS gain the brand recognition that will enable them to stop selling at discount prices (I think JTS 3 gig goes for $185, while most other brands go for $190-$205)
You mentioned a coming overcapacity, but I do not know for sure if this will be the case. Fujitsu is a relatively small player but is expanding aggressively. IBM has also announced big expansion plans, and Western Digital so far has also expanded their market share. Seagate has been losing share, and possibly Quantum as well (I think they sell their Bigfoots to Compaq so they must be doing ok). Micropolis is trying to stage some kind of comeback, and maybe even Maxtor too.
Of course, it is a rapidly expanding market, so large expansions aren't incredibly surprising. As to whether people will still want JTS drives given overcapacity, my guess is that computer builders will buy JTS drives as long as they prove to be reliable and inexpensive (I've never seen a Western Digital inside sticker)
--Scott
|
