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Technology Stocks : QUANTUM
QNTM 9.380-4.7%Dec 12 9:30 AM EST
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To: Gottfried who wrote (6727)12/14/1997 6:23:00 PM
From: Stitch  Read Replies (2) of 9124
 
With apologies to Sankar I will also reply re: barriers

There are two huge barriers to entry. First to discuss is capitalization. It doesnt take all that much to set up a disk drive assembly operation i. e. JTS. But if you do not have some control over heads and media you are lost. And to manufacture these takes a huge investment. Even if you have the wallet and stomache for it, you have to hit it right, and we know from many experiences in this business that isnt easy. At one time, for example, there were 47 independent companies making thin film media for the HDD industry. Today there is only a handful of independents (7) and vertical integrators (6).

The second large barrier is technology. You have to manage several very tricky technologies to design and make a disk drive and its key components. I mean "stuff" that forces you to measure and hold tolerances within angstroms, and micro inches. The established industry is doing very well with that indeed at 60% improvements in recording density per year. And they have done so while delivering a substantial price decrease in both cost-per-megabyte and asp. Thats a pretty fast curve to climb onto. Don't slip or you will be dead meat.

Finally, the proof is in the pudding. Ask Jim Porter how many disk drive companies he had in his annual report 10, and 5 years ago. His list decreases every year.

Good Luck and Regards,

Regards,
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