Western Digital 2012 Annual Report Download - page 10

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PART I
Item 1. Business
General
We are an industry-leading developer and manufacturer of storage products that enable people to create, manage,
experience and preserve digital content. We design and make storage devices, networking equipment and home enter-
tainment products under the WD, HGST and G-Technology brands. We serve each of the primary markets address-
ing storage opportunities — enterprise and cloud data centers, client, consumer electronics, backup, the internet and
other emerging markets such as automotive and home and small office networking.
We operate our global business through two independent subsidiaries due to regulatory requirements — WD
and HGST, both long-time innovators in the storage industry.
Our principal products today are hard drives that use one or more rotating magnetic disks (“magnetic media”) to
store and allow fast access to data. Hard drives are today’s primary storage medium for digital content. Our hard
drives are used in desktop and notebook computers, corporate and multiple types of data centers, home entertainment
equipment and stand-alone consumer storage devices. Our other products include solid-state drives, home entertain-
ment and networking products and software applications for smart phones and tablets.
We have achieved 10 years of consistent profitable growth, with revenues up 19% and earnings per share up
34% on a compounded annual growth rate basis.
We have one of the industry’s largest patent portfolios with more than 6,000 active patents worldwide.
WD was founded in 1970 as a specialized semiconductor manufacturer and is headquartered in Irvine, California.
Since entering the storage industry in 1988, WD has been a technology standard-setter in the industry’s highest
volume markets. Its reliable, high-performance hard drives and solid state drives are deployed in a wide range of
computing, embedded systems and consumer electronics (“CE”) applications, as well as in its own storage systems as
the center of the connected home and in small business markets. WD also connects people with their content through
WD branded network products, media players and software solutions.
HGST, known as Hitachi Global Storage Technologies before its acquisition by Western Digital in March,
2012, was founded in 2003 through the combination of the hard drive businesses of IBM, the inventor of the hard
drive, and Hitachi, Ltd (“Hitachi”), and is headquartered in San Jose, California. HGST develops advanced hard
drives, providing high value storage for a broad range of host systems in the enterprise, cloud, personal computing, CE
markets; enterprise-class solid state drives and innovative external storage solutions used to store, preserve and manage
the world’s most valued data. For a further description of our acquisition of HGST in March 2012, see “Acquisition”
in Item 7 of this Annual Report on Form 10-K.
The global market for digital data storage devices is growing, driven by several factors including:
‰Proliferation of data. The proliferation of consumer electronics and computing devices is driving rapid
growth in the creation, sharing and retention of high definition video, high resolution images, e-mail and large
data files. Recognizing these trends, we believe that the annual growth of petabytes stored will be approx-
imately 33% between calendar 2011 and calendar 2016.
‰Evolution in data access and distribution.Increasing demand for data access and distribution anytime and
anywhere, facilitated by rapidly improving network accessibility and higher bandwidth, is powering a
dramatic increase in the need for data storage at both the local storage level and in the off-site, network-
accessed or “cloud” level.
‰Advancements in storage devices. Technological improvements in the capacity, size, performance, con-
nectivity and power requirements of storage devices continue to meet the demand for higher density and
higher performance storage.
‰Rapid growth in consumers’ use of mobile computing and storage and use of digital content in the home.
4