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Technology Stocks : Seagate Technology - Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (10)	11/8/1998 1:40:00 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 1989

Stitch, you wrote: I think the answer is yes as storage is just too critical an element in technology and disk drives have little in the way of competing technology in the near future (10 years IMO). It seems to be fashionable right now to pan the disk drive industry but what you said about disk drives, I believe, is right on the mark. If it weren't so, then why are so many heavyweights interested in a share of this market? It is this interest partly, that has made the industry so competitive. How many companies do you see clamoring to enter the hand-held calculator business? I have spent many years trying to understand the nature of competition in various industries. Sometimes it can be very destructive as has been the case in disk drives. Other times a state of peace of peaceful coexistence emerges as the participants carve up the market and establish their own niches. I believe a few years ago the HDD industry was headed for this but then something changed and each player wanted to become a "full-range" drive supplier. I think it was Gus who wrote an excellent post on this topic. I apologize for not being able to provide a link. My research leads me to believe that more consolidation needs to take place before the shrillness of competition is attenuated to the point where profitability will increase greatly. The rewards to the stockholder should this occur will be enormous, however, as profits and the multiple the market will place on these profits will dramatically expand. This is why I believe that the losses of the last year are positive. It is this climate that will lead to consolidation and the removal of excessive capacity from the industry. Look what has happened to the airlines after destructive competition led to consolidation and less price competition. I anticipate that the next few years will bring the same to the HDD industry. At that point it will be fashionable to praise the drive industry rather than bury it. -Robert