The stock market, in the early 1980s, experienced a speculative bubble in hard disk drive manufacturers. All the ingredients existed for the new industry to succeed and for investors to lose money.
The computer industry has a long history with new technology that increased performance coupled with gradually declining costs. Hard drive technology was no different.
From the start, hard drives were complex and expensive, so they were mostly used on mainframe computers. But that changed in the early ’80s. Technology improvements throughout the late 1970s lowered costs and better computer performance drove a need for more storage. Hard drives were in demand.
Industry analysts, in 1979, projected OEM sales at $700 million by 1983, up from $27 million in 1978. The next year, they raised the ’83 forecast to $1.1 billion. Actual sales didn’t disappoint.
The projections set the industry into overdrive. And the industry had all the necessary ingredients for success: high growth projections, rising valuations, easy access to capital, new technology innovation, cost reductions, and new uses for drives. Continue Reading…