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To: Gottfried who wrote (250)	12/2/1998 3:08:00 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 1989

Gottfried, You mentioned the auto industry as one that has excess capacity. Perhaps even more relevant to the HDD makers would be the auto parts suppliers. Their role is very similar to the drive makers as an input into PCs, servers etc. While never earning excess returns the big auto-makers have generally allowed the parts suppliers to earn acceptable rates of return. The box makers on the other hand seem to play one drive maker against the other striving for nothing but lower prices. It is not a good business practice to continually abuse your “subcontractors” because it may come back to haunt you in terms of availability and quality. I think the consolidation in the PC industry might be a godsend to the drive makers if it results in healthier relationships between these two intertwined industries. -Robert