Originally Posted by seriousjoker
I don't think anyone needs a finance PHD to tell this simple econ logic. There are just two main HDD companies in the world now. Seagate is making 100% more profit than WD last year, and the different is so big that if Seagate keeps earning that much more every year, after 20 years Seagate can just buy WD with cash. The situation for WD is so bad that WD can only do whatever to increase its profit in this year. One of the best ways to boost up the earning is to make lower durable, lower quality HDD and forget about the later reputation issue. This applies to all lines, everything new HDD that WD needs to make because WD is in danger position right now.
Company goal is to make profit and keep its dominate position in market, WD has to do whatever to maintain its position. If WD keeps having that much less profit comparing to Seagate, few years later Seagate can have many different ways to kill WD. One example would be Seagate saves enough profit then suddenly keeps its HDD at very low price, force WD to have no profit. After few years then WD has no choice to give up just because they have much less money in bank to fight in price war.
There are so many companies making cars and no one really dominate, but there are only two giants in HDD industry at this moment.
*sigh* You really do think you know it all?
If you "analysis" is correct, you are arguing that "in a near-duopoly, the smaller company will make lower durable, lower quality and based on this you can determine warranty impact"?
If so, what then is reasoning for a 3-year warranty on both AMD and Intel CPUs?
How about this..... Conversely, a smaller company may IMPROVE quality to provide BETTER products to improve on reputation for higher priced products. (a la Apple).
Or how about this... rather than compete against a bigger HDD company, the smaller company is more agile to move into new markets.
What you are assuming is terrible terrible economics/business... there are vastly more factors that you can imagine. Cost is NOT just in the production. In fact, the cost is only a fraction of the total price of a production.
Besides, Seagate cannot buy WD. In fact, Toshiba is selling Hitachi's 3.5" HDDs directly due to the fact that WD and Seagate are a duopoly. Furthermore, OEMs basically require at least two suppliers for their products.
Furthermore, do you know why WD bought out Hitachi and why Seagate is making such higher profits? Enterprise. Your "analysis" falls apart when you add in the highest margin profit center.Edited by DuckieHo - 10/14/13 at 8:25pm