I posted this to the WDC thread.
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However . . . my purpose today however is not to rub salt. <g> To all HDD investors, I bring three rays of hope. These unlikely angels of salvation go by the names William Gates III, Craig R. Barrett, and Mark Geenan (who?). Now, I won't say anything if you sell now and eat your losses rather than be helped by the likes of these. <g> But if you can stomach the thought, read on!
Like the three wise men, each of these come bearing a gift to the downtrodden HDD investor.
1. Bill brings the gift of 98. 98 what, bottles of beer? No, Windows 98. <g>
2. Craig brings the gift of i740. More on this later.
3. Geenan brings the gift of a horrible forecast for the industry. <g>
The key things to realize at this time are:
(a) the industry is obviously suffering from a serious supply/demand imbalance;
(b) a changing of the guard is underway in industry leadership -- Seagate has given way to IBM and WD is under siege by the Korean Dastardly Duo, Maxtor and Samsung;
(c) capacity expansion has nearly come to a halt;
(d) the hero of prophecy will come -- as has always been the case throughout HDD history -- from the demand side. <g>
Keep those things in mind as I talk about the coming boom in HDD.
1. Win 98. A quick inspection of my C:\WIN98 properties indicates that it currently consumes over 200MB of space under FAT16. This is beta build 1691; the release may be more. It certainly will not be less. This is a brand new installation; the only application I run in 98 is Unreal. More about Unreal later. I expect the 98 system HDD requirements, including the swap file, to exceed 500MB under normal usage. With a basic suite of applications such as Office 97 and IE 4, basic HDD requirements approach 1 gig. Which means the MINIMUM disk space for BASIC functionality is 2 gigs. General functionality wants at least 4 gigs. The difference in wholesale pricing between 2 gigs and 4 gigs is trivial - about $15.
Bottom line: watch Win 98 sales very, very closely. In PARTICULAR watch for indications of an upgrade wave in the still-huge installed base of 16-bit Windows machines, which may be jettisoned en-masse to deal with Y2K. This will certainly create a surge in HDD demand.
2. i740. My complete attention over the past month has been engaged by the unfolding story in the graphics sector. By the end of the year, I expect just about every PC sold to pack some serious 3D crunch power in the form of either the i740, the RIVA128 and 128ZX, the TnT, the Savage 3D, and Voodoo Banshee. Mostly though, the i740. If it doesn't happen by year end 98, it will CERTAINLY happen sometime in 99 when Intel builds the i740 core into the upcoming Whitney chipset. Now, the question is, how much demand does 3D create for drive space? For the answer, let's ask my E-drive a question:
QUESTION: "E:\dir unreal /s"
ANSWER: ". . . Total Files Listed: 220 File(s) 431,995,428 bytes"
Note that the byte count shown is "pure" count; actual drive space consumed will always be greater (on the order of 20-40% for FAT16) due to cluster inefficiency. This means that this one game sits on over 600MB of drive space. Whew.
3. Geenan's forecast. Here we are very indebted to Sir Oliver and his notes from the recent meeting of the Magnetics Society.
Message 4995231
Those who are familiar with my theory of cycles know that the stage for a boom is set by lowball forecasts that choke off capacity expansion. Looks like we're (finally) starting to see some nice, grim forecasts.
Here are some other, smaller, but significant rays of hope:
4. DVD is coming, slowly but surely. The large boost in software delivery vehicle capacity combined with the inherently low access/transfer performance of removable media will create HDD demand.
*Keep an eye on DVD sales and pricing.*
5. Internet bandwidth to end-users is coming, slowly but surely. DSL and data over cable will spark storage demand.
*Keep an eye on the hi-band installed base.*
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The sector is not out of the woods yet but these are the milestones I'll be on guard for that prime me to reverse my positions.
God bless,
PX
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