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

To: Sarmad Y. Hermiz who wrote (7810)	1/16/2000 3:50:00 PM
From: Mark Madden	Read Replies (1) \| Respond to of 9256

Sarmad, Thank you for the interesting angles you are considering. I see several puzzling prices and I think part of the puzzle is the poor data I have for this kind of analysis. The data comes from 6 distributors out of hundreds that exist. WD may key their business to certain OEM's or large distributors such as Comp USA where they give special prices. The distributors may have bought larger quantities of certain drives to cater to their particular customers and thereby get a better price. Manufacturers may not have their low price drives available to these distributors because they are maxed out filling EOM orders. They could have lower priced drives because they are clearing inventory of discontinued drives. Or, they could raise the price because they are short on stock and will soon run out of stock at lower prices. My few samples need to be considered skeptically. For example here is what I see from the data. The WD 13gb drives averaged $162 with 5 samples but they varied from $139 to $190. The WD 20gb drives averaged $221 with 4 samples but they varied from $197 to $240. One WD 27gb drive is $214. With this high variability, I would need many more samples to get significant data. Still we see some things that seem to make sense. Since different manufacturers have different capacity points, no one manufacturer rules all sectors in price. Maxtor comes close with their first to market high capacity platters. Apparently, drives are sold on more than price alone. Perhaps there are compatibility issues, speed issues, service issues connectivity issues and maybe even reliability issues. I think your point stands in spite of my data shortcomings. Drives can be sold at higher prices. The key to the industry is for manufacturers not to produce more drives than they can sell at profitable prices. Their work on the channel distributors should help manufacturers make more reasonable sales predictions and give us the stability we need. I think the low end of the high end that SEG mentioned in their conference call was the low end of the enterprise segment. Enterprise customers are sometimes more concerned about speed and connectivity than they are capacity. Specifically, SEG mentioned the introduction of their 18gb Barracuda and Cheetah drives as the solution. These drives use SCSI or Fiber Channel interfaces that connect to larger systems than stand alone computers. Regards, Mark