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

To: DJBEINO who wrote (6766)	2/2/1999 5:34:00 PM
From: DJBEINO	Read Replies (1) \| Respond to of 7841

Seagate cuts distribution roster in half By Mark Hachman Electronic Buyers' News (02/02/99, 01:17:08 PM EDT) Disk drive vendor Seagate Technology Inc. cut its disk drive distribution roster for the Americas from thirteen to six companies in an effort to send a stronger, more focused message to the channel, executives said. The surviving Seagate distributors are: Arrow Electronics Inc., Bell Microproducts Inc., CHS Electronics Inc., Decision Support Systems Inc., Ingram Micro Inc., and Synnex Information Technologies Inc.. All have existing relationships with Seagate, explained Phil Detweiler, senior vice-president of corporate marketing for Seagate, Scotts Valley, Calif. "What we decided to do, after many long hours of strategy sessions, was to focus our efforts on a smaller number of players who could provide better service and better support for our customer base," Detweiler said. "That translates into a stronger presence in the channel." After thirty days, Seagate will sever its contractual ties current distributors including: Tech Data Corp., D&H Inc., Hamilton Hallmark, SED International, Pinacor, Globelle Corp.'s Canada division, and Comstor Corp. However, Tech Data will likely continue to distribute Seagate's tape drives, Detweiler said. Seagate will devote more field representatives to its remaining distributors in an attempt to increase its channel presence from its current level, an estimated 35% to 40% of total sales, Detweiler said. The move is indicative of an ongoing trend toward paring distribution rosters while suppliers commit more resources to the remaining players. "Quite simply, Seagate was overdistributed," said John Monroe, drive analyst at Dataquest Inc., San Jose, Calif. "Everybody carried them." And while the storage industry is enjoying a rare period of prosperity, Seagate and its immediate competitors again lost market share during the fourth quarter, Monroe added. According to preliminary Dataquest estimates, a total of 43 million drives were shipped during the fourth quarter, far outstripping analysts' earlier projections. Although final tallies were not available, the combined share of the top-tier suppliers -- Seagate, Quantum Corp., and Western Digital Corp., in that order -- for 1998 fell to 51.5%, down from 63% in 1997 and 68% the year before. Five suppliers all shipped more than 5 million drives per quarter, leveling the playing field to an unprecedented degree. Though so many drives shipped from such a breadth of suppliers, Monroe said drive companies still need to focus on three core strengths: quality; time-to-market execution; and asset velocity, or quickly developing new products. While the changes will help Seagate execute on those core strengths, Monroe said the fundamental nature of the market hasn't changed. "You can simply make some money at it," he said. ebnews.com