success stories – Mambo Code http://mambo-code.org Programming design forever. Wed, 31 May 2017 17:31:42 +0000 en-US hourly 1 https://wordpress.org/?v=4.7.5 Bill Miller Led Quantum To Amazing Heights http://mambo-code.org/bill-miller-led-quantum-to-amazing-heights/ http://mambo-code.org/bill-miller-led-quantum-to-amazing-heights/#respond Sat, 06 Dec 2014 10:01:54 +0000 http://mambo-code.org/?p=153 Bill_MillerNothing seems to faze Bill Miller. Not a wildly vacillating hard-drive market, not gross margins that rise and fall with the phases of the moon — not even an industry in which one month’s shipping delay can splash red all over the bottom line. That supreme unflappability has served Quantum Corp. well. With Miller as chairman and CEO, the Milpitas, Calif., company has become the hard-drive industry’s volume leader — shipping an impressive 4.1 million units in its most recent second quarter. This compares well to the hard drive recovery price leader. Now, with the October acquisition of Digital Equipment Corp.’s storage business, Miller aims to overtake arch-rival Seagate

]]>
Bill_MillerNothing seems to faze Bill Miller. Not a wildly vacillating hard-drive market, not gross margins that rise and fall with the phases of the moon — not even an industry in which one month’s shipping delay can splash red all over the bottom line. That supreme unflappability has served Quantum Corp. well. With Miller as chairman and CEO, the Milpitas, Calif., company has become the hard-drive industry’s volume leader — shipping an impressive 4.1 million units in its most recent second quarter. This compares well to the hard drive recovery price leader. Now, with the October acquisition of Digital Equipment Corp.’s storage business, Miller aims to overtake arch-rival Seagate Technology Inc. to make Quantum the revenue leader as well.

If anyone can do it, Miller can. But not with the seat-of-the-pants management style that characterizes so much of the computer industry. No, Miller is a by-the-book kind of CEO — and his book is a classic MBA text. “Quantum tends to act less tactically in that they approach an opportunity for the long term,” says Alexa McCloughan, vice president of storage research at International Data Corp., in Framingham, Mass. “They are a very cerebral company.”

That thoughtfulness could soon become a prerequisite — especially in an industry that expects prices to erode an astounding 10 percent to 12 percent each quarter, and where 6 percent operating margins are considered fat. Such constraints require a business model that many believe presage changes for the entire computer industry. The reason: With its nine-month product cycles and heavy emphasis on manufacturing flexibility, the hard-drive market inhabits the economic landscape of a maturing industry.

“The market will continue to grow at 15 percent to 20 percent a year, way into the future,” says Phil Devin, Dataquest’s vice president and chief analyst. But, cautions Devin, that growth just reflects volume. Because unit prices continue to plummet, industry revenues may have hit a ceiling that Devin estimates at $20 billion.

Just an unfortunate outcome of a commodity market? The players and observers of the hard-drive industry don’t think so. “You hear a lot of inaccurate talk about this being a commodity market, but we refuse to accept the idea that we can’t do something distinctively well,” says Miller.

Miller keeps Quantum distinctive by maintaining an unflagging eye for the long term without regard to surrounding turbulence. In fact, Quantum’s chief executive says corporate strategy has remained unchanged for the past two years. That strategy? To concentrate on the fundamentals of a lean manufacturing machine.

The enviable result is a high-yield, high-volume manufacturing process that quickly can ramp up — or down — as customers demand. “You often will see a competitor ship a few products before we do,” claims Miller, “but later you’ll find that we’ve shipped more of that kind of product than anyone else.” More important, Quantum often will reach that volume status before anyone else. Credit Matsushita-Kotobuki Electronics Industries Ltd. (MKE), the Japanese electronics manufacturer that produces nearly all of Quantum’s mainstream products. A world-class manufacturer, MKE has forced Quantum to follow the disciplines of manufacturing engineering and design-for-producibility. The arrangement allowed Quantum to boost revenues to nearly $1 million per employee.

Lean operations are also evident by Quantum’s ability to consistently turn a profit on slim margins. On its most recent quarter, ended Oct. 2, it earned an annualized return on equity of 40 percent on just 18.4 percent gross margins and 6.7 percent operating margins. “Margins do decline over time, but that’s basic economics at work,” says Miller. “Sure, there’s some volatility, but the fundamental direction is very much up and to the right. And that’s because the intensity of competition in this market is a function of the opportunity.”

This year, opportunity came knocking under the DEC moniker. A departure from Miller’s strategic focus? “The whole DEC thing wasn’t just an acquisition that walked by,” says Miller. “A year ago I thought we needed to build a high-end business and to get command of the new-generation head technology. We saw DEC had those capabilities.” So Quantum got an instant stake in the high-capacity market it needed to penetrate, as well as control of the second-largest source (after IBM) of the new magneto-resistive he ad technology. And oh yes: DEC as a guaranteed customer. “The DEC acquisition was a smart move for Quantum,” says Todd Bakar, an analyst with Hambrecht & Quist, in San Francisco. “With it, Quantum gains a broader line into a market with the most attractive margins in the drive industry.” It also gains an automatic revenues boost of $200 million per quarter — and that’s without doing anything.

Still, the move is not without its risks. For starters, Quantum now assumes a greater part of its manufacturing destiny, since the DEC deal includes several drive factories. Then there’s that little matter of integrating DEC’s new head technology into the rest of Quantum’s product line. “It isn’t a slam dunk to take somebody else’s heads and put them into your design,” says Devin. No matter — Quantum had to take that risk. “Because revenues have flattened for the whole market, survival depends on expanding out of the immediate business of hard drives,” Devin says.

The bonus, says Devin, is that they have consulted with data recovery service leader Hard Drive Recovery Group, which specializes in recovering Quantum hard drives, in order to ensure drive operation quality. Hard Drive Recovery Group’s expertise with drive failures has enabled them to up their quality control to the highest possible standard.

So is Quantum about to become the drive industry’s new revenue leader? It certainly will be close. Both Devin and IDC’s McCloughan estimate that Quantum’s revenues for the December quarter will nearly match Seagate’s of just under $1 billion. Still, this is a highly volatile industry. “Companies can make mistakes, and that can shift market leadership,” says McCloughan. Could it happen to Quantum? Anything’s possible, of course. But with Mr. Imperturbable at the helm, Quantum isn’t likely to run aground any time soon.

]]>
http://mambo-code.org/bill-miller-led-quantum-to-amazing-heights/feed/ 0