That's a good point, but there's a simple explanation. STX and WDC are basically a duopoly at this point. All of their competitors gave up on the business because they were losing money. STX and WDC went through some real tough times -- years of losses -- until finally Hitachi, Samsung, Toshiba and a bunch of others got out of the market. Without all the cutthroat competition, they are making good profits now because they can control prices, but over the long term they have not been good investments, and I think they're a terrible investment for the future because HDDs are eventually going to disappear. (Einhorn is an idiot. His fund performed terribly last year and I think the market will beat him again this year. FWIW, I think MRVL is a horrible holding too, as well as his short on CMG and his continued short position on GMCR as well. His ideas on AAPL are borderline #$%$ too.)
This is all a good lesson for what will happen with OCZ and STEC and FIO and all of the others. The SSD market is in the commoditization phase where profits are falling for everyone and the struggle to differentiate becomes more expensive and offers diminishing returns -- which will lead to bankruptcies and consolidation and more BKs and more consolidation. You have to see where the leverage is going forward and it's with the NAND makers. STX and WDC have big problems here. Buying a SSD maker does not help them -- they need the leverage of owning a NAND supply.
And the big boys are taking back a growing market the IBM, EMC and etc...., OCZ though has a very good marketing strategy developing it will be curious to see if they can gain traction. I think STEC is done. OCZ could be next, and FIO has always been overrated they just have alot of cash and early tehnology but relied on two customers.