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Samsung Canada restructures its hard drive business model

By consolidating its hard drive business to its global headquarters the manufacturer plans to be more efficient and responsive to market conditions

Samsung partners are tentative after learning the company will no longer offer its hard drives through Canadian distributors. Instead they’ll come its Korean headquarters.

For Calgary-based Memory Express, Samsung account for 40 per cent of its disk drive sales. Chris Monette, the company’s purchasing manager, initially said it could be a mistake to leave partners without a distribution option here, but he wanted to speak with Samsung before making further comment.

“They’ve been a big part of our business and I hope they continue to be. Hopefully it works out to benefit both us and them,” said Monette.

Jack Lee, vice-president of marketing and business development at Vancouver-based NCIX, said he is also anxious to speak with his Samsung rep about how the decision affects supply and warranty.

“We move (such) a sizable amount of Samsung product that it would make an impact,” said Lee. Roughly 20 per cent of NCIX hard drive sales come from Samsung. “They’re not our main line but they’re outstanding drives and have a great place in the market.”

Lee added that though the drives are not super high-performance, “they are very reliable, well-engineered, quiet and offer great warranty.”

According to Samsung Canada, the change in approach to managing the hard drive business at the headquarters level is to encourage a more streamlined and efficient business model by leveraging the company’s global expertise in supply chain management, logistics and production.

Bob Park, director of marketing at Samsung Canada, said he expects some growing pains and initial shock from the partner community, “but in the mid to long term its going to be less expensive for them and more efficient.”

Park added that in the hard drive market the number of players has come down exponentially. “Only the fittest survive and ultimately Samsung wants to be there. By making these changes we think its going to have that long- term effect,” he said.

Samsung Canada has yet to finalize the exact distribution network for its partners. “The only announcement we’re making is the change in process from local management of the supply chain to managing HDD (hard disk drives) as part of the global network and taking advantage of the global infrastructure that is available,” he said.

Park characterized the move as proactive rather than a reaction to the competition, namely Seagate’s acquistion of Maxtor.

“In order to remain ahead of the game you have to economies of scale so moving into 2007 we want Samsung hard drive products to be placed in the position where not only we can compete but add value in different ways, and this was the best way to do it,” he added.

Meanwhile this month Seagate released three MobileMax 2.5-in. notebook drives, in 40-, 60- and 80GB capacities with 2MB of cache.

They are the first notebook drives under the Maxtor brand and will be sold exclusively through the channel. In addition, Seagate overhauled the Maxtor DiamondMax PATA and SATA desktop hard drives in sizes from 40 to 320 GB with either 2GB or 8GB caches.