Hard Drive Price War Coming

Seagate Technology CEO Bill Watkins says a price war in the hard drive business industry is a possibility. Seagate is the world's largest hard drive manufacturer and are in direct competition with companies such as Hitachi, Samsung and Toshiba. On Wednesday, Watkins said "If pricing doesn't drop for us, it'll be an upside." Seagate is expecting stiff pricecutting 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 their 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 alsonoted 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 andannounced that it would cut the company in half. Seagate mentioned that despitethe 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 productsunder the Maxtor brand name.

Atthe 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 confidentabout his company's business practices, saying "we have a very rigorous stock-option grant program. It'ssuch a rigorous process. We feel confident."
News source: DailyTech

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