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

To: Gottfried who wrote (3180)	5/2/1998 4:21:00 AM
From: Tom Simpson	Read Replies (2) \| Respond to of 9256

>I had not given it any deep thought, but had assumed that drive >makers would not want to increase average head content to keep >costs low. One could write a book about the cost factors at work here....but it would be out of date before the truck delivered it to the bookstore. Your assumption is a good one. And each platter costs them 10 bucks a piece (roughly) so the less of those the better also. As for the head/suspension WAG you may be in the ball park for component costs but there is some further manufacturing input to assemble them that costs money also. If we could dig up numbers for head stack assemblies we would have a better idea of the real costs of those elements. The trouble with the Fool's logic is sloppy use of percentages and terms. There is a distinction to be drawn between 15% long-term drive growth and long-term "storage" growth. One can kind of figure if PC shipments are going grow at 15%, so will drive units. It is a separate issue what the growth rate of the drive unit storage capacity is going to be and how that will be satisfied by technology. In actual practice, technology does not move in a nice smooth curve. I just went through a bunch of Seagates specs (they have a whole lot of stuff on their website) and when you look at the platter density jump we are making this year compared to last, it overwhelms the problem. Take an example. I bought 2 2GB ST32155W Hawks 20 months ago for my machine. Thats 4 platters and 8 heads each, which works out to 250mb per surface. I just checked the new WDC Enterprise unit which gives you 9GB on 6 platters/12 heads. That is 750mb per surface. Not only that but it costs less than just one of the Hawks did (then). We have both a 3 fold increase in density and an 8 fold cut in the cost per byte. Do I need a 3 fold increase in storage space? Not yet, and if Janet Reno does her job sitting on Bill, maybe not this year. So here we are after 18 months and net-net I can have twice the storage for half the cost. And guess what? I'll be using 3/4 the components too; and putting out half the heat as well. This is actually a reasonable perspective with your typical power user desktop. When we look at server market there is a different set of demand dynamics at work, the demand for more storage per server as well as the demand for more servers does not necessarily track with the demand for PC's. But here too, the supply provided by improvements in density, at least on a near term basis, are overwhelming. The only bright spot for component folk would have to be the sub-500 PC and things like JAZ where you might look for a whole lot more than a 15% increase in drive units. Then there are the PC deprived in China and India. As for two drives in a PC, I just can't see it (although I ALWAYS have 2 myself). As long as density growth keeps pace with the growth of storage demand per PC, there is no need. Assuming GMR is for real, we can expect 6 platters to be storing 20-40 GB in the not too distant future. The investment thesis for the component manufacturors had better be centered on asp growth ahead of unit growth. I think it is going to be add value or die, for a couple of years anyway. Tom