Maxtor took the express lane to the top of the hard-drive industry with last week's planned acquisition of Quantum's Hard Disk Drive Group.
The combined company, to be known as Maxtor, will vault over industry stalwart Seagate in terms of hard-drive unit sales.
Seagate sold 36.5 million drives in 1999, compared with a combined total of 52.5 million units between Maxtor and Quantum, according to Peripheral Research. All three have been profitable for the past several quarters.
While the hard-drive industry is cyclical in nature, the new Maxtor does not plan to cut production because of the merger, says John Gannon, president of Quantum's Hard Disk Drive Group. But he believes the need to consolidate the industry is strong. "We can either sit and wait for it to occur, or pull together the strongest players," he says.
The new Maxtor will keep all the current production facilities of both companies, including the Quantum partnership with Matsushita-Kotobuki Electronics Industries.
Maxtor executives expect the combined operations to realize annual cost savings of $120 million to $200 million within 18 months to 24 months of the close of the acquisition. The savings will come via reduced administration and support costs as well as cuts in duplications in product development.
Unaffected by the acquisition is Quantum's non-hard drive business, which includes its DLT tape drives and automation products, ATL tape automation subsidiary and Snap NAS line. These lines are part of Quantum's DLT & Storage Systems Group, which will be known as Quantum after the acquisition.