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Hard disk price hike may make PCs dearer

Personal computers may get costlier worldwide as hard disk drive manufacturers are expected to raise prices to make up for their per unit production losses, top official of a leading hard disk drive company has said.

At present, hard disk manufacturers are selling at below cost prices worldwide but they are unlikely to continue on this path for much longer, Western Digital vice-president for East Europe, middle-east Africa and Indian subcontinent Ken Larsen said.

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"With today's infrastructure, at least $145 is needed to break even. Companies can go in for $130 for some more time but not forever. It's either $145 or quitting the business altogether," Larsen said while announcing his company's investment plans for India.

"The industry price point has dropped drastically in the last 10-15 months worldwide; from $190 to $170 and is expected to touch $130 this year," he added.

Larsen was here to announce a $350,000-400,000 investment in India by Western Digital in 1999 to corner 20 per cent of the country's hard disk market.

This investment will include plans to set up service centres in all the major Indian metros via Western's biggest distributor in India, Servex ME Ltd, by January next year.

Elaborating Western's India plans, Larsen said, "We've opened an office in Dubai in May this year to specifically cater to Indian and the Middle-East markets, investing over $750,000."

"Of this, at least $350,000-400,000 will fund our plans for the Indian market," he said.

Lamenting his company's inability to identify potential Indian computer industry offers earlier, Larsen said this is partly due to price disadvantage Western Digital had earlier, considering India is an extremely price-sensitive market.

"But as soon as we realised we could be competitively priced in this country since the entry-level prices have dropped in India, we began building our infrastructure here through our major distributor Servex," Larsen said.

The company has chalked out plans for the Indian market that, Larsen said, is only second to China with an annual growth rate of 30 per cent when other developed markets like US have either stagnated or are showing insignificant growth rates.

At present, Western holds at best 5 per cent of the 700,000 unit Indian hard disk market. Its distributors in India are Servex ME, Al Yousuf and Nepula. While over 80 per cent of Western's sales come from Servex's distribution network, the company is scouting around for two more distributors that should be in place in early 1999.

Utilising Servex's network, Western's 1998 sales are pegged at 70,000 units (total Indian sales at about 80,000).

"We're targeting 150,000-200,000 unit sales in 1999, using our strengths of aggressive pricing and high-quality hard disks," Krishan of Servex said. Making their Indian exhibition debut together, Western Digital and Servex feature in the ongoing IT India Comdex show here.

Products being featured include those announced in the last few weeks from WD Caviar (EIDE) and WD Enterprise (SCSI) families of drives.

Worldwide, the hard disk market is expected to grow by 14.1 per cent in 1999 to 163 million units from 129 million in 1998, Ken Larsen said.

- Compiled from the Indian media

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