RE: Maxtor
Dataquest has some preliminary estimates of how the drive guys did in 1996:
Preliminary Rigid Disk Drive Industry Shipment Share Estimates
95 % 96%
Seagate Technology 18.6 27.5
Quantum Corporation 23.1 22.2
Western Digital Corpo 13.7 (12.3M units) 18.4 (19.5M units)
Conner Peripherals 12.9
IBM 11.1 10.5
Maxtor 7.6 (6.8M units) 5.8 (6.1M units)
Others 13.1 15.6
Total 100.00 (90M units) 100.0(106M units)
Source: Dataquest (January 1997)
Everybody lost market share except Western Digital, which gained about 35%, or 7.2 million units. Observers believe that not only did WDC grab market share in its traditional stronghold, the desktop segment, but it also gained market share in enterprise drives, especially after HWP left the drive business and put its 11% share up for grabs. In the first full year of Hyundai's ownership, Maxtor lost the most percentage-wise, about 24%.
There are increasingly clear signs, however, that KM is central to Maxtor in its attempt to reverse the decline in its market position and eventually grab share from the others. Maxtor currently has the following product lines:
MobileMax (laptop drives) - 940 mb to 1.35 gb
7000 series (phased out)
CrystalMax - 877 mb to 3.5 Gb
DiamondMax - 1.280 Gb to 5.12 Gb
Maxtor's CrystalMax competes with the desktop products of the others, as follows:
Seagate - Medalist, Medalist Pro, Diskstor - 850 Mb to 4.3 Gb (14 capacity points)
Quantum - Fireball/Pioneer/Bigfoot - 1.0 Gb to 4.3 Gb (14 capacity points)
Western Digital - Caviar - 1.6 Mb to 4.0 Gb ( 5 capacity points)
Maxtor - CrystalMax - 877 Mb to 4.06 Gb ( 8 capacity points)
Reliable sources have indicated that Maxtor is completing the development of drives (either as extensions to CrystalMax or as a totally new line ) with keepered disks that will allow Maxtor to offer the same prices as the competition, BUT WITH 30% ADDITIONAL CAPACITY. The desktop drives from the top 5 have the same reliability ratings - about 300-350,000 Mean Time Between Failures (MTBF) so except for some speed differences in some models, these drives are basically commodities. There are also indications that Maxtor will not offer anything other than keepered drives in the high volume, low margin desktop market. As has been mentioned many times before, once keepered disks are designed into a drive package (channel electronics and all) the only variable cost is really the cost of adding the keeper layer, or a few pennies per disk.
Additionally, there are clearer signs that Maxtor has effectively doubled its drive production capacity from the previous 6-7 M to around 12-13 M drives. The MaxMedia platter startup is really just the most visible part of the expansion that Hyundai undertook when it finally took control of Maxtor in late 95 or early 96.
Lastly, aside from the obvious technical and financial advantages of getting 30% more capacity for less than a nickel, Maxtor can also go to their distribution channels, the retail and mail order folks, and easily sell a product that is expected to sell quickly, but one that would also be even easier to unload if a glut similar to the one that developed last year in the 2nd and 3rd quarters happens again. More shelf space. More ad space for a traditionally strong aftermarket ( 1.5 disk drives sold for every computer sold).
Those of you who continue to pine for a deal with Seagate or Western Digital right away are, I think, missing the point: Maxtor, with 15-16 straight losing quarters, rapidly decreasing market share, but with a rich Korean parent that just added several layers of fixed costs, is really the most motivated drive maker to introduce KM and introduce it in volume, even buying up market share, even plunging the desktop drive segment into price wars. All to increase unit volumes to justify even more fixed costs necessary to grab even more market share, etc. They have the money now. And the KM discount gives them some slack.
That is, of course, the starving junkyard dog scenario. And the anticipation is that the other drive makers will eventually come around to AXC and neutralize the junkyard dog by taking away its 30% additional capacity for a nickel advantage. The Maxtor deal may have created some movement in the positions of some of the other major drive makers. As always, time will tell. |
