DEMAND FOR 3 1/2 -INCH FLOPPIES OUTSTRIPS THE SUPPLY Production of 52 million a month just isn't enough


SAN JOSE, Calif. -- Business has never been better for producers of 3 1/2 -inch floppy disks, the pocket-size, hard-shell data repositories most personal computer owners use to get their new software into their machines.

Business these days appears to be too good. Demand for the little plastic platters is so heavy that the world's manufacturers simply can't keep up with it. By some published estimates, the industry is producing about 52 million of the diskettes a month -- about 6 million to 8 million too few for current demand. And the shortage could last all year and maybe into 1993.

A combination of large numbers of new software releases, along with the growing number of diskettes required by larger modern programs, has manufacturers building them at capacity, leaving some wholesalers and disk duplicators scrambling.

"I'm getting more product than I ever got, but I'm selling more than I ever sold," said Don Friss, president of Creative Data Products, a San Jose wholesaler of diskettes. "I could sell everything I could get my hands on."

The shortage is in the bulk diskettes used in the disk-duplicating business, which, under contract to software publishers, takes master disks of their products and mass-produces the copies consumers buy. The brand-name blank disks sold to consumers in retail stores appear to be unaffected -- largely because they fetch a higher price for manufacturers and so are a production priority.

Insiders began predicting the possibility of a shortage in December, said Norman Tu, president of Discopylabs in Fremont, Calif., one of the country's largest disk duplicators. But it only became serious within the past two months or so, helped in part by Microsoft's introduction of Windows 3.1, for which the company manufactured 1 million copies, and the subsequent release of several major programs to complement it.

"What people in the business are used to is picking up the phone and calling the wholesaler and asking for 10,000, 20,000 or even 100,000, and a day later getting the media," Mr. Tu said. "By March, if you hadn't done your planning and ordered ahead, you'd be told it'll take you six to eight weeks."

Manufacturers said it may take several months to gear up their factories to satisfy the demand. Minneapolis-based 3M Corp., which primarily supplies the "branded" retail diskettes, said it, too, is selling every one it can make and it wants to increase capacity. But "you can't bring that much equipment on line that fast," said company spokesman Larry Teien.

The shortage probably won't be felt strongly by consumers. Major software companies said they don't expect the undersupply to lead to shortages of computer software on store shelves.

The Software Publishers Association, a Washington industry group, said it isn't even an issue for its members, most of whom are the industry's best-known companies with enough clout to get the diskettes they need -- and who will pay whatever price they have to.

Even if the current wholesale price of 75 cents to 85 cents for high-density 3 1/2 -inch diskettes shot up to several dollars each, that would still pale compared with the huge profit each box of software brings its publisher.

But for some less-substantial companies who didn't plan appropriately, the shortage could take its toll.

"The smaller software companies, the smaller duplicators, they're just out of luck," Mr. Friss said.

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