Thread,
From Computer Reseller News (April 20, 1998):
"JTS Corp., San Jose, No. 10, grew the fastest of any of the market leaders. Revenue was up 106 percent to $185 million. It also reported a loss in the fourth quarter. "
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Here's the article:
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April 20, 1998, TechWeb News
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Hard-Disk Drives -- History Repeats Itself As Bloodied Vendors Take Battle To High-End Arena
By Joseph Kovar & Amber Howle
Some thought the hard-disk-drive industry's periodic blood-letting was a thing of the past. But that proved wishful thinking at the close of 1997.
Market leader Seagate Technology Inc., Scotts Valley, Calif., suffered a $107 million loss for its four quarters ended Jan. 2. Two other industry heavyweights, Quantum Corp., Milpitas, Calif., No. 3, and Western Digital Corp., Irvine, Calif., No. 4, also went into the red in the final quarter of 1997.
Oversupply and price erosion characterized this market throughout 1997. And no silver lining to this dark cloud was in sight for the market leaders.
"Manufacturers built more than they could sell," said Al Shugart, chief executive of Seagate. "As long as supply is out of balance, we will have price erosion."
Shugart said Seagate faced more competition in 1997 than ever before, especially in high-capacity drives, where Seagate had been the dominant player. "IBM and Fujitsu were new to the area, and Quantum and Western Digital expanded their presence there," Shugart said.
Indeed, according to Trend Focus Inc., Palo Alto, Calif., IBM increased revenue 29 percent to $6.6 billion, and Fujitsu Computer Products of America Inc., San Jose, Calif., came on with a vengeance, boosting revenue a whopping 85 percent to $2.4 billion.
IBM Storage Systems Division, San Jose, No. 2, did not suffer from overproduction, according to Dave Ernsberger, division vice president for IBM. By staying out of the sub-$1,000 PC market, IBM enjoyed an overall higher per-unit price for its drives, he said.
In fact, Ernsberger said IBM planned to expand its distribution and production capacity this year. But he added that both would be done in a controlled manner.
Quantum's revenue was up 11 percent to $4.9 billion, helping it gain on Seagate, but not enough to move out of its third-place market position.
Quantum's own push into the high-capacity arena contributed to its red ink. Quantum was counting on new product introductions and a reorganization in December to turn the high capacity segment back to profitability. But the company did not expect to turn a profit in the segment until 1999.
"We established fewer programs and fewer platforms to focus our resources on getting our products to market in a more timely fashion," said Rick Clemmer, executive vice president and chief financial officer for Quantum.
Western Digital also moved aggressively into enterprise storage, which was part of the reason its revenue grew 17 percent. "Western Digital is pleased with our results in that area," said John Burger, vice president of marketing.
While Western Digital may have been pleased with its enterprise storage business, it announced late in 1997 that it was exiting the mobile-drive market.
"Notebook PC sales were squeezed by sales of desktop and Windows CE systems," Burger said. "Also, the mobile-drive sector is dominated by two firms which also manufacture notebook PCs."
Ironically, while the top tier was caught in a price war, Maxtor Corp., Milpitas, No. 6, saw its first profit in several years in the fourth quarter. The company's revenue also grew sequentially every quarter and was up 27 percent to $1.4 billion for the year.
Michael Cannon, president and chief executive, said Maxtor was careful about adding production. "We will add only if we get a big customer win or if we are confident about demand," he said.
JTS Corp., San Jose, No. 10, grew the fastest of any of the market leaders. Revenue was up 106 percent to $185 million. It also reported a loss in the fourth quarter.
The industry may be looking at another tough year ahead, said John Donovan, vice president of Trend Focus. Many users upgraded amid last year's falling prices, and Asia's troubles could hurt sales.
SIDEBAR -- Winners' Circle
-Seagate faces more competition than ever in enterprise storage arena.
-IBM stays out of over-production trouble by staying out of sub-$1,000 PC market.
-Western Digital guns for the enterprise while withdrawing from mobile drives.
-Fujitsu comes on with a vengeance as revenue climbs by 85 percent.
-Quantum gains on Seagate but struggles for profitability in enterprise drives.
-Maxtor returns to profitability by being cautious about expanding capacity.
Copyright (c) 1998 CMP Media Inc.
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--Dennis |
