FREE ESSAY ON ISSUES IN HDD INDUSTRY

ISSUES IN HDD INDUSTRY

Issues in the HDD industry
? The world market for HDDs today is almost $26 billion. By any standard, this is a large
and important sector of the electronics industry. This industry also provides an
excellent example of the increasingly complex competitive requirements that result from
the globalization of competition
? The competitive requirements in the HDD industry are not much different from the rest
of the electronics industry: intense price competition needs to be combined with product
differentiation, while continuous price wars have drastically reduced profit margins. 
? A hallmark of this industry is the incredible demanding requirements of its supply
chain logistics. HDD assembly is heavily dependant on a large number of high precision
components and their sources are spread over different continents. 
Delay in supply or poor quality can affect the production. Limited availability of a few
key components has constrained the company's growth. Maxtor which used to be the
country's largest supplier of HDD had suffered because of its excessive reliance on
outsourcing.
? The industry also faces high entry barriers. The face entry barriers like barriers
related to intangible investments, barriers to entry and exit of supplier networks
(subcontracting and OEM arrangements), and barriers related to sales, marketing and after
sales services. 
? Economies of scale, volatile demand patterns, competitive pricing are prevalent in this
industry. 
? International production, as in the case of Maxtor, has magnified the impact of
unexpected disruptions in its value chain, reduced the operational flexibility.
? This industry also suffers from partial globalization, affiliates, joint ventures, and
suppliers scattered across the globe that co-exist without much interaction.
? Maxtor also faces certain tax risks. Due to the company's operational losses, favorable
taxes in Singapore, the company's tax expenses have been a small percent of its expenses.
The company's U.S and foreign tax liability will increase once the company starts making
profits. If Maxtor fails or is unable to meet the compliance with the required condition,
it would loss its tax status will have an adverse effect on the company's business and
financial conditions.