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What you are seeing in the Computer industry is a classic business pattern,
particularly in Consumer Electronics. I saw the industry go through similar
machinations during the 60's thru 80's . What will happen, is the weak
companies will go by the boards or be absorbed by the majors and a handful
of major manufacturers will dominate the business as in Consumer
Electronics.
I have gone through these above described situations in Consumer
Electronics management for 40 years. Any questions??
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> From: Wizard <cwizard@xxxxxxxxxx>
> To: metastock-list@xxxxxxxxxxxxx
> Subject: Hard Drive Mfgs.
> Date: Sunday, December 14, 1997 3:16 PM
>
> Hi All:
>
> I see that some of you are interested in hard drive manufacturers. This
> is not a healthy sector. Seagate is closing down a plant in Ireland
> they've had since the early days of pcs, Western Digital and Quantum are
> hurting. Micropolis went out of business with no warning Nov. 10th.
>
> With Samsung a major player in the 3.5 HD market, expect to see the
> other guys really hurting by this spring due to the deflation of the
> Korean currency and the price advantage Samsung will have.
>
> The hard drive mfgs. have about killed themselves off with price
> cutting. They thought volume would make up for margin; it doesn't. I
> anticipate that Samsung will be unloading a whole series of components
> at a deflationary price. Short term great for the consumer, e.g. get
> your Samsung 21" monitor for maybe 700-800 dollars, long term bad for
> the industry with fewer companies left. I got stuck with a ton of
> Micropolis equipment.
>
> I've been in the pc business for 15 years and have never seen things so
> messed up. The mfgs have priced themselves and resellers practically out
> of business.
>
> Just a note about Dell: The only reason Dell has made such unexpected
> profits has not been due to sales but component deflation. HP, Compaq
> and IBM are going after them now with channel assembly. They have lost
> their price advantage and are losing big accounts to Compaq already. By
> this summer, the darling of CNBC is going to have less than stellar
> performance. I guess this is why Michael Dell filed to sell 300,000
> shares last week.
>
> Robert
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