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Hard drive offers 11.5GB for $479

Maxtor releases a low-cost, high-capacity 11.5GB hard drive, as the company turns to IBM for key hard drive components.

Maxtor released a new, high-capacity, low-cost hard drive today, as the company turns to IBM for key hard drive components.

Maxtor announced an 11.5 gigabyte (GB) hard drive for desktop computers which uses "magnetoresistive head" (MR) technology to boost capacity.

The drive is priced at $479. New drives with this capacity are often priced more than $1,000.

It comes in a 3.5-inch form factor, which is generally more compact than 5.25-inch drives. The latter boast higher capacities but also at much higher prices.

Currently, the largest 3.5-inch hard drives on the market for desktop PCs hold about 9GB.

Demand for inexpensive, high capacity media is increasing. Games, full-motion video, and other multimedia applications are filling up even the largest hard drives, creating an almost insatiable need for more data capacity.

Maxtor's new drive uses IBM MR heads, which help hard drive makers to achieve higher and higher data densities on disks. MR heads are used to read and write hard disk drive data.

Maxtor is a wholly-owned subsidiary of Hyundai Electronics America.

In related news, IBM announced that it will supply MR heads to Maxtor based on production at new China-based production facilities. Head production will be part of a $20 million expansion of its China operations.

IBM's investment will establish Shenzhen IBM Technology Products, a wholly-owned subsidiary located in the Futian Free Trade Zone outside of the southern Chinese city of Shenzhen. The 46,200-square foot MR manufacturing facility is scheduled to begin operations by April 1. IBM intends to employ up to 200 people by the end this year.

The MR heads will be manufactured exclusively for desktop PC hard drives. Nonetheless, IBM has not ruled out expanding into the notebook or server markets in the future.

"IBM is obviously supplying their own needs, and I suspect the only problems with IBM products in the market place is that they're slightly pricier," said Alexa McCloughn of International Data Corporation.

The announcement is IBM's latest cash infusion into its Storage Systems Division, in which it has invested $680 million since 1996. Despite industry concerns of an economically weakened Asia, IBM believes the market places it in an advantageous, and profitable position.

"Most of our customers [in Asia] are making a transition from old technology to newer technology," said IBM spokesman Joanne Mumola Williams. "We see growth from these transitions. They're buying a lot more MR heads because they're dropping thin-film inductive heads [the technology that preceded MR heads]. As they make that transition, they're starting to buy MR heads, so we're getting a lot of that business."