The Australian hard drive market has been thrown into disarray by the economic crisis in Asia, and it will be some time before it recovers. That's the word from several of the big players approached by ARN to comment in the aftermath of Seagate Technology's recent financial announcements.
On January 20, Seagate Tech- nology announced that it would be shutting down manufacturing plants and laying off 10,000 employees worldwide in the face of severe financial losses.
Precipitating those losses had been a slow decay in demand for the company's high-performance drives and losses of up to $US160 million on currency exchanges.
A spokesperson for Seagate said that the company had been experiencing erosion in its market share since may last year and, in December, had entered a restructuring phase designed to get the company back on track.
Another big name caught up in the melee is Quantum, which announced a $US32 million loss last quarter. Neil Campbell of Quantum told Australian Reseller News that there was a massive oversupply of hard drives in Australia, and that would maintain intense pressure on prices and margins for at least the next two quarters.
Campbell said that Quantum was "well balanced" to ride out the storm because of its more conservative manufacturing estimates than some of its competitors. Seagate in particular, he said, "placed undue price pressure on itself in the high end, where it was dominant. Last year, they lost 20 per cent of their high-end market share, and they won't get that back."
Phillip Adams, director of Maxtor in Australia, was not as confident for the long term. He felt that the oversupply on the market would take at least the next 12 months to clear, if not longer. he agreed with Campell that the currency crisis in Asia had seen makers "dump" product on the Australian market.
He said Maxtor had not participated in the price wars that had hurt its competitors so badly, but instead had focused on bringing product to market at particular price points and capacities where demand outstripped supply.