Okay, here goes.
On the desktop side, Maxtor is time-to-market, time-to-volume leader, gaining share, and barely profitable. Quantum is a few months behind, but historically has an superb time-to-volume ramp, so they're pretty close. WDC is third, but they seem to be rapidly catching up with the newest programs. Seagate is dead last in getting programs to volume, and has a tendency to announce vaporware, which surprisingly tricks some brain-dead industry analysts.
7200rpm desktop is a niche-y business, not very high volume, and has longer product cycles. This is key. Halfway through the product cycle, newer generations of 5400rpm drives surpass them. Seagate's Medalist Pro was late, and held an advantage to 5400rpm drives for only a little while. The Maxtor Plus was timely, so has kept the advantage for a few months now. But again, the highest density 5400rpm drives are beginning to eliminate the performance gap.
On the high-end, Seagate was again late, and lost oodles of share to IBM and Fujitsu. They now whine about their competitors' "aggressive" pricing every single quarter. WDC's last enterprise drive was actually early, grabbed a few share points, but fell to the wayside when the other drives came out, because of performance and quality issues. Quantum's drives were late, but have been better received. If they can get the next generation out in a timely matter, they should finally break into the first tier here.
On the 10,000rpm super high-end niche, Seagate owns the market with the first product in this sector, the Cheetah. Competition has heated up, and all the majors (Seagate, IBM, Fujitsu, Quantum) and one minor (Hitachi) has targeted this in the next generation. I think time-to-market is absolutely key here. The first two competitors who can get out of the gates here will undoubtedly gain share, but margin pressure will soon increase in this sector due to the increased competition.
Seagate's deteriorating competitiveness and high capital expenditure requirements are the reasons I remain bearish on their investment outlook. Both are related to their vertical model. Despite my skepticism, SEG has rallied regardless. But don't forget that the entire sector has rallied, even those with unresolved liquidity issues (read: they are going to have to file Chapter 11 or issue highly dilutive securities)-- APM, KMAG, RDRT, and HMTT. |
