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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Frodo Baxter who wrote (6563)	6/11/1999 2:14:00 AM
From: Frodo Baxter	Read Replies (2) \| Respond to of 9256

After two failed attempts at price signaling through price increases, Quantum, the Saudi Arabia of desktop drives, has been slashing prices aggressively. Not only that, they have recently flooded the channel. Finally, the price delta between 5400rpm and 7200rpm has contracted greatly. (LT, what's the cost differential between these drives if they have the same areal density?) The implications from all these actions are crystal clear. I wouldn't want to be a pure play disk drive manufacturer with a weak balance sheet right about now.

To: Frodo Baxter who wrote (6563)	6/11/1999 2:20:00 AM
From: Stitch	Read Replies (1) \| Respond to of 9256

LT <<The battleground today is in the 3.2 to 4.3 GB capacity disk drives. The 6.8GB/platter stuff is now in the middle of the desk top capacity range, and from what I hear, demand there is slow (relative to the less than 6GB capacity point).>> Sam <<So why wouldn't a one platter 6.8g drive be more attractive to an OEM and a user than a 3.2 or 4.3 drive, presuming (as I do) that they cost pretty much the same? Why wouldn't it blow the 3 or 4 gig drives away?>> Lawrence <<Maybe this is true for lesser desktop players like SEG. QNTM has indicated they have already shifted the sweet spot to 6G in their last cc. And since their ASPs are already $100...>> I think you have to differentiate based on the food chain here guys. I think LT's initial remarks are true if you consider primarily the fastest growing sub-whatever segment of the PC market. This is “Joe Sixpack” buying a computer to get ESPN updates on the web. He doesn't know a giga byte from a snake bite. But if he buys a $600 system chances are his drive will be 3.2 GB. The segment that his purchase represents, fastest growing but not the largest, will eventually integrate 6GB drives for all the reasons we know about already. In any case, LT is inevitably correct about costs, yields, etc. But that does not account for something else LT could tell you and that is that pricing is a self inflicted wound and may not reflect cost or yield factors. In any case, Porter helps us see this a little better: “Currently, desktop drives dominate shipments, with 74.9% of the 1999 estimated worldwide total, followed by server drives at 12.7%, and mobile drives with 12.3%.” “There's no stopping the upward movement in average disk drive capacities. Drives in the 3 to 5 gigabyte range held the lead in 1998 shipments, but the market's appetite for more capacity goes up every year. In 1999, leadership has already moved up to the 5-10 gigabyte group, with 40-80 gigabyte drives forecasted to be 2002's leading product group.” So it is easy to see the 3.2 - 4 GB battleground as the biggest etc but that may not be true and the part of the report that Porter doesn't give away to newspaper editors would be interesting here. Since stocks are forward looking I suggest that Lawrence's comments seem the more compelling here and that SEG's execution on U-8 will, in turn, be a compelling thing to watch. (Not to forget Samsung, and our darling WDC, never know what a cornered animal will do, right?). Best, Stitch