CHAPTER 10The Power Game: When Every Move Counts
With contributions from Federico Fabbri and Jan Gildemeister
Hard disk drives (HDDs) – the whirring, clicking memory banks inside personal computers – are characterized by their capacity and performance. Introduced by IBM in 1956, these data storage devices played a pivotal role in the explosion of general‐purpose computing and became critical components of personal computers in the 1990s and beyond.
But from the late 1990s to the early 2000s, profitability plunged in the HDD market. From the beginning of 1995 to the end of 1999, the median annualized total shareholder return for HDD makers was –7%, in stark contrast to the annualized return of the tech sector's S&P 500 IT at 52% and the broader S&P 500 at 29%.1
Why did this happen?
Part of the answer lies in Moore's law, which predicts that the number of transistors in dense integrated circuits grows geometrically every year.2 The equivalent metric in HDD technology is areal density. Gigabits per square inch had increased geometrically since the 1990s and even faster than what Moore's law predicted. Scientific American dubbed this trend Kryder's law, after Mark Kryder, the CTO of Seagate, one of the leading HDD manufacturers.3
A key implication of exponential growth is continuously declining costs. As a result, pricing for technology products can be akin to negotiating a ...
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