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To: Tony Viola who wrote (80369)	5/3/1999 12:51:00 PM
From: Robert Douglas	Respond to of 186894

Tony, The hard-disk drive industry's problem comes before the ultimate pricing of their product so collusion there would not work. What these companies need to do is collude on expansion. In the past all of these firms have added capacity at way too rapid of rates. In a commodity business or semi-commodity business, which I believe the HDD business to be, this can be fatal. One of the reasons that I am investing in these stocks is that I believe the slower rates of growth of a maturing industry will actually be helpful.

To: Tony Viola who wrote (80369)	5/3/1999 1:34:00 PM
From: GVTucker	Respond to of 186894

Tony, RE:<<GV, so the hard drive manufacturers continue to stab themselves to death, practically giving away their products, this is good? I had to switch out of ECO 101 to get another class, so tell me, do commodity business companies have any chance of getting decent margins, or do you have to have a significant "IP quotient",or significant other advantage over the competition to do that?>> In a commodity business, price does eventually go to marginal cost in a competitive world, both in theory and in practice. A competitor has 2 choices: 1) compete on price, and work like hell to keep a cost advantage over your competitors (Southwest's solution) or 2) redefine the business in your customers' minds so that it is no longer perceived as a commodity (Philip Morris comes to mind first, but there are certainly others). As to the hard drive mfg's, you know far more than I as to which option would be more feasible. And in the meantime, as price continues on its tortuous path to marginal cost, I'd argue that the overall economy continues to benefit from their blood letting.