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Technology Stocks : Western Digital (WDC) -- Ignore unavailable to you. Want to Upgrade?

To: Sarmad Y. Hermiz who wrote (10788)	9/9/2003 12:35:26 PM
From: Sam	Respond to of 11057

Sarmad, I'm not sure you were following the DD thread when this happened, but we had a loooonnnng runnnnning debate about the vertical integration issue in the early days of that thread (Gottfried was there, and can vouch for this, I dare say). I haven't listened to Shakeel's rap yet, I'll try to get a chance later on (not till the weekend most likely), but I suspect he doesn't say anything we didn't say back then. The upshot of the discussion can perhaps be summarized by the comment that vertical integration is great when it works, and it is terrible when it doesn't. Whichever way you slice it, either with or w/o VI, you get a problem that has costs. Neither IBM nor SEG (note: I say SEG here rather than STX on purpose) ever made it consistently work. And in IBM's case, it almost never worked, even though they had outstanding R&D, wonderful scientists and invented the DD industry. They could never pull it all together and make it work as a business. In principle, assembling drives isn't very difficult--but doing it as a mass enterprise, producing the right drives at the right time getting them to right people at the right price--that (to paraphrase one of my favorite philosophers, Aristotle, from the Nich. Ethics) is no longer simple and is not something just anyone can do successfully, especially over a period of time, hitting the sweet spots and avoiding the sickening drops in price which renders inventory your enemy. Complicating that with designing, manufacturing and integrating heads makes the job all the more difficult. It's a big chore. Matt and Ari have their work cut out for them. They'll need all the good luck that I wish for them (and for you). Sam