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Consumers benefit again

According to reports, we may witness a price war in the hard drive business industry. At least this is what Seagate Technology CEO Bill Watkins said on Wednesday. Seagate is currently the world's largest hard drive manufacturer and competes with such companies as Western Digital, Hitachi, Samsung and Toshiba. According to Watkins "If pricing doesn't drop for us, it'll be an upside." Seagate is expecting stiff price cutting from its competitors through into 2007.

Seagate believes that despite the aggressive price cutting from competitors, the only gains they are receiving are minor. Watkins indicated that "[our competitors] are getting volume units and share, but it's lousy share." Watkins said that Seagate gains more share because of product quality, reliability and support rather than heavy price cutting. Watkins also noted that Seagate's competitors are cutting prices so much, it erodes into the profitability of its competitors.

Seagate acquired its largest competitor, Maxtor, earlier this year and announced that it would cut the company in half. Seagate mentioned that despite the job cuts, it would keep many of Maxtor's enterprise level product lines and services. Seagate also made several announcements of its own so far this year, including a 300GB, 15,000 RPM, perpendicular Cheetah and 1TB NAS products under the Maxtor brand name.

At the moment, Seagate is one of the few companies that are not under investigation by the US Securities and Exchange Commission. The SEC is currently investigating more than 80 companies for stock-option manipulations and back-dating practices that give huge financial gains to executive level employees. Watkins indicated that he was confident about his company's business practices, saying "we have a very rigorous stock-option grant program. It's such a rigorous process. We feel confident."

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Is the Consumer Really Winning?
By AntiTomZandmasher2 on 8/15/2006 11:37:50 PM , Rating: 2
Sure, hard drive prices will drop, but will they go to ~$20 or so? Prices have been fairly constant; capacity and speed have gone up. Why can't I get a recently manufactured (not resold) 100 GB drive for super cheap? Planned obsolescence and corporate profit margins make me sad. In the end, I'll end up paying around the same if I want to get a new machine.

By mindless1 on 8/16/2006 2:38:21 AM , Rating: 2
You can't get one for super cheap because:

1) You're paying for research, manufacturing, maintenance, shipping, advertising, warranty coverage, etc. The least of the costs is actually a 2nd/3rd platter, another arm and pair of read heads. Single platter drives are by far the best value except when there are other goals like system data density.

2) There's still profit margin, stores have to be mindful of handling and dedicate the space.

3) Price per GB can't drop too much because capacity goes up due to platter density increases. The cost of a single-side one platter drive hasn't fluctuated so much, you're only considering capacity without the platter context and you can't buy a drive with only 1/3rd a platter or 67% of one head in it. There's still the PCB, housing, bearings and motor and all aforementioned overheads still.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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