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Xyratex

Structure of the Business
Originating as a division of IBM in 1966, Xyratex was formed in a management buy out in 1994, With their head office in Havant. Xyratex provide storage systems and network solutions. They are heavily involved in research and development and have published many white papers. The company structure is divided into two core competencies: The Network Storage systems provide storage subsystems, such as storage controllers, and disk drive enclosures. The storage infrastructure segement provides hard disk drive production test equipment, media write entertainment, substrate and media cleaning systems, and media automation. Xyratex sells its products to Original Equipment Manufacturers (OEMs) and disk drive manufacturers, mainly located in North America, Asia and Europe.

Business Model
Xyratex mainly supplies products as components and modules to OEMs, and are keen to show that their business model is well suited to this market. Over one quarter of the companies employees work in research and development. (Xyratex, 2008)

As Xyratex sells to other equipment manufacturers, their main product can be said to be technical knowledge, meaning the emphasis of the company is on research and development. Once a concept has been proven through testing, it is then sold off or produced under licence by a customer. This ensures that they are isolated to some extent from the cost and issues of large scale manufacturing and fluctuations in the market, but suggests that they could generate more income by taking on a larger share of the product chain. It may also mean that they are dependant on developing new features to ensure continued sucess.

Market Value
The total value of holdings is listed as $ 70,242,905.20 (Nasdaq 2009). The share price for Xyratex has dropped significantly over the last year, (22.97 on 17th June 2008, 1.55 on 2nd February 2009) (Wall street journal, 2008) despite achieving notable successes, such as supporting EDI technology's security for the 2008 olympic games (Janes Airport review, 2008). this may be due to a trend affecting the industry, due to current economic trends, with investers turning to utilities, as they are seen as more stable. Or may be due to failing confidence in the companies future technological advances.

My analysis is that the company seems successful, but have been greatly affected by the recent economic factors. Their continued success is based on new innovations, which requires that the employees must be of a high standard, such that they continue to improve and to introduce new concepts to the market. Xyratex business model seems highly focused, allowing them to make significant advances in their chosen field, but also requires that the market for such products remains healthy. This is also likely to determine the size of the company, as they can only expand as far as demand allows, unless they expand in a new direction, which would require a change to the company's structure and business model. For this reason it is unlikely Xyratex will become as large as other companies in the industry, who have a more diverse product line, or control more of the supply chain. The near future may prove a breaking point for the company, depending on customers demand for new products, or even how many of the customers struggle in the current climate.

References:

Anon. (2008 ) EDI picks Xyratex for 2008 Olympics [Electronic Version]. Jane's Airport review. Vol. 20, no. 2, pp. 40

Anon. (2009) Nasdaq , XRTX quote. Retrieved april 3, 2009, from http://quotes.nasdaq.com/asp/SummaryQuote.asp?symbol=XRTX&selected=XRTX

Anon. (2009) Wall street Journal, XRTX quote. Retrieved on April 5, 2009, from http://online.wsj.com/public/quotes/main.html?symbol=XRTX&type=usstock%20usfund&mod=DNH_S

Anon. (2008) Xyratex company Profile, retrieved on April 5, 2009, from http://www.xyratex.com/pdfs/company/Xyratex_Corporate_Profile_February-2008.pdf