History (1996): IBM Invests $380 Million in MR Heads

In spite of results that continue to fall short of the company’s objectives, Big Blue is still determined not to give up its magnetic HDD business, an area which the firm pioneered.

It anticipated setting aside $250 million this year in order to up drive production. It decided to add in an incremental investment of $500 million last March, among other reasons in order to double the production of its Singapore plant, triple that of the Thailand facility, and also increase production in Hungary, which will produce 2.5-inch HDDs in addition to the 3.5-inch devices already underway.

And now, another $380 million is being allocated to step up production of its magneto-resistive recording heads, currently produced in San Jose, CA, and Mainz, Germany.

This figure brings total investment to more than a $1 billion.

At one point, IBM was ready to sell off its MR heads, which it alone manufactured. Then the firm changed its mind, discerning that this component was crucial to obtaining better recording densities on magnetic platters, and thereby differentiating a given product from its competition.

Today, other sources for MR heads exist, even if they’re still few (TDK, Yamaha). HDD drive manufacturers such as Seagate and Quantum also make them for their own needs.

The time has come, according to IBM, to begin offering them to competitors.

“Many companies are trying to catch up with IBM in this technology but we have the clear lead,” said Dr. Vince DePalma, VP technology sales and operations, IBM SSD. “Given the strong growth the HDD drive industry has experienced, this represents a significant OEM business opportunity for IBM.”

According to Dave Ernsberger, VP, HDD business line management, IBM SSD, sales to OEMs won’t begin before 4Q97, taking into account the long evaluation period needed by clients in order to integrate this kind of product.

As for the glass disks used in all of IBM’s 2.5-inch drives, the company has long turned to Hoya Corp. for the majority of the media. Now, the 2 companies are going further, concluding an agreement to develop jointly glass media with even higher capacity. They will cross license technologies, with the Japanese firm disclosing know-how on glass magnetic disks in exchange for IBM’s disk drive technology.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 104, published on September 1996.