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

To: Yogi - Paul who wrote (3202)	5/4/1998 11:46:00 AM
From: LK2	Respond to of 9256

Yogi >>Disk Drive companies did very well when everyone needed to upgrade their storage capacity at any price.<< Yogi, where did you learn to think? You make things so simple even someone like me can almost understand what is happening. Thanks for the input. Best regards, Larry

To: Yogi - Paul who wrote (3202)	5/4/1998 12:47:00 PM
From: shane forbes	Respond to of 9256

Yogi: I was making the argument that capacity will be used up because it is cheap. I was not arguing the economics for the scenario. What I guess I was implicitly debating is the point that 1/2/3 Gig drives are all that one needs to have from now to eternity. I think not. The elasticity that arises with the cheaper capacity means people will store more and more and that will bring in more demand for the higher capacity drives. ---- Onto the economics of the whole thing, some rambling: Here are the 2 different scenarios: (1) Capacity is expensive: that's what you spoke about. Situation is people are not apt to store anything that's not nec. on their hard drives. Too darn expensive. Then when people inevitably run out of space as software gets bigger and are thereby forced to upgrade, the hard drive companies rake in the bucks. (all as you said) (2) Capacity is ridiculously cheap: then the hard drive makers (the smart ones) dump the low end and move up to the higher end drives. The higher cap. drives become standard on computers. Now true the upgrade cycle is kaput - esp. in the interim as people don't know what to store with all that capacity available(happening now I guess). Since the capacity is cheap however, people will now store anything and everything. Ideally this then leads to the same situation as (1) down the road. Maybe not and let's assume this: The economics are under (1) original + extra one when one runs out of space vs. (2) monster hard drive now perhaps 6-7 times as big as the original under (1). One PC comes with one HD. So the argument to the HD maker is will the loss in #of units (1/4 less say - since everyone won't upgrade) make up for the increase in cap. And this boils down to (ignoring fixed cost per drive) the difference between: 1 + 0.25 vs. 6-7 or 1.25 vs. 6 say. So if price/G is down fivefold things break even. Conservatively let's say 3 fold drop in price/G means break even. Yup I know there are errors here. But I'm just rambling. It is lunchtime... Shane.