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Hard times end for hard drive makers

Days of oversupply are over it seems

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Disk drive manufacturers are bouncing back from last year's saturation of the market, thanks to improved demand and inventory management. Preliminary figures from Dataquest suggest around 43 million drives were shipped in the fourth quarter, way above analysts' predictions. Less than a year ago the market was flooded and prices were being driven down. The new figures could result in prices stabilising or even rising. Analysts think manufacturers have learned the hard way after last year's downturn resulted in massive inventory excess. Specific data was not available, but five vendors were said to have sold more than five million units each in the fourth quarter. In addition, market share shifted away from the top-tier players. The combined share of Seagate, Quantum and Western Digital slipped to 51.5 per cent last year, from 63 per cent in 1997 and 68 per cent in 1996, according to John Monroe, a Dataquest analyst. Established leaders were suffering at the expense of second-tier suppliers like Fujitsu, IBM and Maxtor, Monroe said. Drive makers were feeling optimistic and forecasting flat growth for the first quarter. According to Dataquest, the industry has just got over the longest period of oversupply in its history. But as Monroe put it: "Now, distributors aren’t looked upon as dumping grounds." ®

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