Armed with new disk drives, Digital takes on competition


SAN JOSE, Calif. -- Digital Equipment Corp., which watched Silicon Valley's personal computer juggernaut crush its minicomputer business, now hopes it can best some of the valley's biggest companies in another battle: disk drives.

The Maynard, Mass., company has announced four new disk drives as part of a plan to dominate the large-capacity high end of the market and compete head-on with emerging products from Silicon Valley heavyweights such as Seagate Technology Inc., Maxtor Inc., Conner Peripherals and Quantum Corp.

Digital has made disk drives, which store information in computers, for its own machines for years. It began selling some disk drive components to other manufacturers in 1990. Soon after that, it started to offer complete disk drives to other manufacturers, a business that has become even more important to Digital since it reorganized last fall.

The nation's second-largest computer firm is ambitious about its disk drive business, which it expects to realize revenues of about $200 million in fiscal 1993 and $1 billion in fiscal 1994.

Digital's new drives can store from 535 million characters of data up to 2.1 billion characters. Instead, they are used in "file server" computers that act as a central data repository in networks of personal computers. They are also used in engineering workstations.

Neither of those markets is big for such companies as Seagate and Quantum -- yet. Those companies primarily supply the personal computer market and are just beginning to offer products that can store a gigabyte of data -- 1 billion characters, equivalent to about 600,000 pages of single-spaced type. But the amount of storage computers require is rising, and local disk drive makers see higher-capacity drives as lucrative additions to their offerings, bringing them face-to-face with Digital.

"The local industry has been awakened to their threat," said Phil Devin, a disk drive industry analyst with Dataquest Inc. in San Jose. Digital had a built-in advantage over Silicon Valley companies, too, Mr. Devin said. It hasn't had to compete in the bloody, price-cutting personal computer hardware business.

But Digital has more to worry about than the half-dozen traditional disk drive companies that dot Silicon Valley. Digital competes more directly today with two other companies better known for computers than disk drives: IBM Corp.'s Adstar division in San Jose and Hewlett-Packard Co.

"They all came in with really good technology, and they got products to the market on time," Mr. Devin said.

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