Western Digital 2008 Annual Report Download - page 22

Mr. Bukaty, 51, joined us in 1999 as Vice President, Corporate Law. He was appointed to Vice President, General
Counsel and Secretary in March 2002, and to Senior Vice President in January 2004, and assumed his current position as
Senior Vice President, Administration, General Counsel and Secretary in October 2004.
Dr. Moghadam, 64, joined us in October 2000 as Vice President, Engineering and site manager of our San Jose
facility. He served as Senior Vice President, Research and Development from November 2004 to November 2005 and was
appointed Senior Vice President and Chief Technology Officer in November 2005.
Item 1A. Risk Factors
Declines in average selling prices (“ASPs”) in the hard drive industry could adversely affect our operating results.
The hard drive industry historically has experienced declining ASPs. Our ASPs tend to decline when competitors
lower prices as a result of decreased costs or to absorb excess capacity, liquidate excess inventories, restructure or attempt
to gain market share. Our ASPs also decline when there is a shift in the mix of product sales, and sales of lower priced
products increase relative to those of higher priced products. When ASPs in the hard drive industry decline, our ASPs are
also likely to decline, which adversely affects our operating results.
If we fail to anticipate or timely respond to changes in the markets for hard drives, our operating results could be adversely
affected.
Over the past few years the consumer market for computers has shifted significantly towards lower priced systems. If
we are not able to continue to offer a competitively priced hard drive for the low-cost PC market, our share of that market
will likely fall, which could harm our operating results.
The market for hard drives is also fragmenting into a variety of devices and products. Many industry analysts expect,
as do we, that, as content increasingly converts to digital technology from the older, analog technology, the technology of
computers and consumer electronics will continue to converge, and hard drives will be found in many CE products other
than computers. In addition, we expect that the consumer market for multi-media applications, including audio-video
products, incorporating high capacity, and handheld consumer storage will continue to grow. However, because this
market remains relatively new, accurate forecasts for future growth remain challenging.
Moreover, some devices, such as personal video recorders and digital video recorders, or some new PC operating
systems which allow greater consumer choice in levels of functionality, therefore allowing for greater market differ-
entiation, may require attributes not currently offered in our products, resulting in a need to develop new interfaces, form
factors, technical specifications or hard drive features, increasing our overall operational expense without corresponding
incremental revenue at this stage. If we are not successful in continuing to deploy our hard drive technology and expertise
to develop new products for the emerging CE market, or if we are required to incur significant costs in developing such
products, it may harm our operating results.
Our prices and margins are subject to declines due to unpredictable end-user demand and oversupply of hard drives.
Demand for our hard drives depends on the demand for systems manufactured by our customers and on storage
upgrades to existing systems. The demand for systems has been volatile in the past and often has had an exaggerated effect
on the demand for hard drives in any given period. As a result, the hard drive market has experienced periods of excess
capacity which can lead to liquidation of excess inventories and intense price competition. If intense price competition
occurs, we may be forced to lower prices sooner and more than expected, which could result in lower revenue and gross
margins.
Our failure to accurately forecast market and customer demand for our products could adversely affect our business and finan-
cial results.
The hard drive industry faces difficulties in accurately forecasting market and customer demand for its products.
The variety and volume of products we manufacture is based in part on these forecasts. If our forecasts exceed actual
market demand, or if market demand decreases significantly from our forecasts, then we could experience periods of
product oversupply and price decreases, which could impact our financial performance. If our forecasts do not meet actual
market demand, or if market demand increases significantly beyond our forecasts or beyond our ability to add
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