Pete, I lost $240k (about 90% of my investment money - margin is a bad thing) on RDRT recently miss understanding the HDD sectors potential for recovery. So I understand your concern.
Having had that experience I suggest a few differences here are:
The HDD sector is established and the players have been around for a while. Some new players came in and wanted market share, MXTR amoung others and were willing to trade margin for share. So an established industry got new competition. IMHO, cable modems are not an established industry, yet. The margin squeeze should be at least 2 to 3 years away once units start shipping in ernst.
The Y2K issues and the "slowdown" of PC sales has and had a direct effect on HDD demand. The fact that CPQ again stuffed the channel and did not need HDD's also hurt this group, IMHO. Couple that to the DELL model being installed at CPQ and Gateway in which the vendor, or HDD manufacturer, now has to clear their distribution channel of product, because it is a just in time delivery, rather than a stock on shelf, and the HDD industry gets hit with a double wammy in unit slow down.
IMHO, cable modems do not have this type of issue currently. When cable providor can release these services in new areas, the units will be flying out the doors of the makers. The issue will be more what unit can provide the services that the cable company wants to offer and get revenue from. From what I read CMTO has done their homework in that area.
RDRT has the further complication of making a change in technology from MIR to GMR head technology. But that is a different problem and not part of the differences I see, IMHO.
I guess it boils down to where the product is in its life cycle. Cable modems are in the early stages, HDD is a mature product line. In the early stages there is room for more competitors, and it gets sorted out by acquisitions, ala ASND/LU, continued business, (NN), or failures, (FORE which got its shareholders whole by being acquired), as the market matures.
Later, Dennis |
