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Quantum Corpn wants to build parking^ lots for information superhighway
MADRID. Oct 3: Quantum Corporation wants to build the parking lots for the information superhighway, reports AP.
That's why William J Miller. Quantum's Chief Executive Officer, led the effort to buy up industry giant Digital Equipment Corp’s hlgh-ehd storage systems production wing.
The 40CI million dollar acquisition, announced July 19 and scheduled to close Monday, will bring some 5,000 of Digital's workers onto the Quantum payroll and g^ve the CaBfornia-based company a potent package of research and production facilities.
And that might just be what Quantum needs to stay ahead in the fiercely competitive, growing data storage market.
The change in technology is frantic, ft's a constant race." Miller said in Madrid Friday in an address to the World Economic Development Congress. "It's like an on-going street-fight."
Key to the deal is Digital's agreement to buy a "significant proportion" of high-end disk drives and other storage systems from Quantum.
In an interview after his speech. Miller said he was not going to disclose details of the arrangement, saying only that Digital, would be "a very big
customer" for Quantum's disk drives.
Industry observers said Digital — which has lost some 4 billion dollar in the last four years and is planning to cut about 20.000 of its 85,000 employees - not including the workers going to Quantum -had decided to sell off the storage operation in order to focus on its core computer business.
The contract puts Quantum - whose bread and butter has traditionally, been data-storage systems for smaller personal computers - in an excellent position to enter the lucrative and growing market in high-perfermance. high capacity disk drives.
"Initially, our output will be about 25 per cent in the high-end product and the rest in the lower-capacity units." Miller said. "The high-end units have lower until volumes and highef variabilities in their especifications."
"But there are very good possibilities to continue the kind of growth we've been seeing - the market potential is -huge, and that brings fierce competition.”
In recent years. Quantum's sales have risen steadily, reaching a high of 2.1 billion dollar in fiscal 1994, 26 per
cenl over the 1.7,billion dollar in sales last year. The Digital buy makes Quantum the leader in market share, with 21.4 per cent to No. 2 Seagate Technology Inc's 19.9 percent.
It also gives Quantum a crucial infusion of know-how. .especially in the technology widely believed to be the next generation in data storage, known as magneto-resistive heads or MRHs.
As part of the deal. Quantum gets Digital's 81 per cent share in Colorado's Rocky Mountain Magnetics Inc., a leading MRH developer.
But while the move into high-end storage systems marks a turning point for Quantum, the company will continue its efforts in the PC market.
Miller points to Quantum's 10-year relationship with the Japanese firm Matsushito Kotobukl Electronics as a major factor in the company's consistent success.
."Without MKE and the capital input they could provide, at times when we needed it. Quantum would not have been able to fund such rapid growth." he said. The relationship Is a fundamental part of our strategy, part of our success."
The remarkably durable
link to MKE is unusual In the modern world of international business where the rhetoric of governmental incentive programs louts joint ventures as the l>est way to spur economic success. With MKE, Miller says, the relationship Is entirely contractual and there is no cross-ownership.
"This relationship is founded in a strategy, not a fad," Miller said. "It's not Just outsourcing or off-loading work somewhere where labour is cheap — this kind of deal needs a more fundamental ba, sis."
Miler pegs the link-up with MKE to the company's decision to invest in a long-term production arrangement that would give them the resources to manufacture quickly and flexibly large quantities of low-end disk drives.
Today. Miller says. Quantum produces some, 75.000 low end drives per day. and MKE handles 90 percent of that out put.
As a result, MKE won'F immediately be involve^ in the production of the high-end units. That duty will be spread among the factories boughi up from Digital, in places such as Mal ivsla. Connecticut. Indonesia and Colorado.