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

To: Z Analyzer who wrote (1770)	12/12/1997 11:42:00 PM
From: Stitch	Respond to of 9256

Z, One postulate for Quantum to shift focus to OEMs is that they traditionally offer more stable and predictable buying practices ... a real boon in these times. But is this really true? The PC makers seem to be herding to follow Dell's spectacular performance with a build-to -order model. Surely this model passes the heat of inventory management to the supply base i.e. disk drive makers. A more interesting question to me is which OEMs they will focus on? There has been some recent analysis that suggest the desktop is not where the action is for now. This is blamed on flattening Internet downloads, (growth in dial up accounts has flattened out and downloads are still held back by lack of bandwidth), and a lack of new productivity software releases. The latter is said to be especially true in the "multimedia" app segment where growth is actually diminishing. Frost & Sullivan has reported that in this app sector sales growth has diminished from 74% in 1996 to an expected 43% in 1997 and only 5.8% in 1998. The disk drive industry has long counted on these two application areas for demand pull. Look at how long the 1.6 GB product has stayed in the market "sweet spot". Introduced in late Fall of 96 it has only recently begun to give way to the 2+ GB drive in volumes. What has been suggested is that the server (or, disk array) market is the hot ticket. Netcentricity of storage is a clear trend though I do not have numbers at hand at the moment. A correlative trend is the decoupling of storage buying decisions.. a practice that is a matter of fact in the mainframe segment (DASD) and starting to happen in a big way in the UNIX workstation market segment as well. Will the individual PC platform segment be too far behind? Another troubling factor in the PC/OEM sector is a simple question about the forecast. All the forecasts I have seen show more spectacular growth in the Asian markets then in traditional US Corp. and Consumer segments. Hambrech & Quist's forecast, published in September, suggests that Japan and "Rest-Of-World" (primarily Asia) would record 20% unit growth YOY versus the US (14%) and Europe (15%). But these forecasts do not take into account recent Asian events. Your comment that markets outside the U.S. are "under PC'd" is accurate. I live in SE Asia and still watch bemused as hand written receipts are the norm. There arent even that many electronic cash registers, let alone PCs. But,can we expect this disk drive demand pull segment to hold up in light of the slowdown here? As mentioned previously, the star in all this seems to be emerging as the nascent server market. I wonder if Quantum's channel strategy will reflect that? Other Comments: Gus, Thanks for the posting re: Veeco. You are very right to look at things deeper down in the food chain. Candidates other then Veeco could include Zygo Corp (ZIGO) and Intevac (IVAC). Burt, re: Komag. I dunno, maybe investors think that the Stormedia/Akashic merge is so lame that it bodes well for Komag? But then you would think HMTT would benefit also. Pierre, I really enjoy your CEO of Silismurf. Nice Quips! uhh..and nice nips.