Conner Peripherals

Conner Peripherals, Inc., the second-largest manufacturer of hard disk drives after Seagate Technology, has grown faster than any other company in United States history between 1986 and 1990. Conner Peripherals started business in 1986 after Finis F. Conner, a well-known computer entrepreneur, and John Squires, a former disk drive engineer at MiniScribe, Inc., agreed to create a new company to manufacture the compact hard disk drive that Squires had created. Conner joined Squires when Squires left MiniScribe, a small manufacturer of 3.5-inch hard drives on the verge of bankruptcy. Squires had completed a prototype 3.5-inch hard drive on his own and had decided to start a company to produce and market the drive. Using software that positioned the recording head on the disk rather than using hardware to perform that function, as other drives did, Squires's product resulted in a faster, more reliable hard disk that could withstand greater shocks without malfunctioning. Aware of Conner's reputation in the computer industry, Squires proposed using Conner's name on his drive and Conner's money to start up the company. Conner was impressed with the drive, and agreed to the plan provided that he be allowed control of the company's strategy and growth rate. When Squires agreed, Conner set about building a company--Conner Peripherals--around a 'sell, design, build' strategy. To keep operations running smoothly in the midst of immediate, explosive growth, Conner quickly assembled a management team, including William J. Shroeder as president to manage day-to-day operations. The company continually sought to simplify operations, making products with fewer parts in fewer steps; rather than periodically designing radically new drives, it constantly improved drives in smaller steps, keeping new models flowing quickly and smoothly. To avoid cash-flow problems, Conner bought all components from suppliers instead of producing them. The company also leased assembly and testing plants rather than building and owning its own and arranged for factory space in Singapore, where labor costs were far lower than in the United States. Conner continued its policy of not engineering a new product unless at least one major buyer had agreed to purchase it, but was quick to spot opportunities and take advantage of them. In 1988 the company entered the market for laptop and notebook computers, the fastest growing segment of the computer market, and its quick entry won it a huge market share. Notebook computers, book-size portable computers with as much power as desktop computers, were beginning to sell in great numbers, and Conner's small, low power-consumption drives fit the limited space and power availability of notebooks better than any other manufacturer's. By making lighter, more powerful computers possible, Conner's drives were in part responsible for the takeoff of notebook computers. In 1989 Conner launched its first 2.5-inch high-capacity drive, geared to the surging notebook computer market, as well as three other hard drives, and quickly dominated the notebook computer market, making 85 percent of the 2.5-inch drives used in notebooks by 1991. It manufactured 2.5-inch drives for Compaq, NEC, Sharp Corp., and Zenith Data Corp. Also in 1989 Conner tied Compaq's record for fastest-growing manufacturing startup by reaching the Fortune 500 in three years. In the meantime, Conner was expanding beyond its close relationship with Compaq. Demand for Conner's products was growing rapidly, and it began producing hard drives for large Japanese computer firms like NEC and Toshiba. As it transferred production to its expanding Singapore factory, the firm laid off about 200 employees out of the 1,000 it employed at its San Jose location. Nevertheless, Conner expanded quickly. Almon was arranging for assembly space nearly a year before it was needed to make sure the company could keep up with demand. In January 1990 Conner decided to open a European assembly s