SanDisk 2013 Annual Report Download - page 104

cameras for high-resolution still images and video, and in solid-state digital camcorders for
high-resolution video. Gaming consoles and portable game devices now include advanced features
that require high-capacity embedded or removable storage solutions and we offer solutions that are
specifically packaged for the gaming market. Our USB flash drives allow consumers to store and
transfer files, pictures and music on keychain-sized devices. We sell a line of digital media players
with both embedded and removable NAND flash under our Sansa brand with varying combinations
of audio and video capabilities. We also sell a line of wireless media drives under our Connect brand
that provide wireless streaming of content to computers and mobile products. Primary removable
card formats for consumer devices include CompactFlash, SD and microSD.
•Computing. We provide multiple flash storage devices and solutions for the computing market. We
provide SATA and PCIe SSDs for the client computing market, which encompasses tablets, notebooks,
thin-and-light laptops and desktop computers. We also provide and are developing enterprise SSDs that
are designed for mission critical environments and include solutions optimized for storage in write
intensive, read intensive and mixed use applications. These enterprise SSDs include SAS and SATA
SSDs for enterprise storage systems, and PCIe SSDs and newer categories, such as our
ULLtraDIMM↩, which are designed to accelerate application performance in servers. We also provide
enterprise software solutions designed to improve performance of SSDs in traditional and virtualized
environments, in both mass storage and data cache acceleration configurations. We believe that SSD
solutions will be the key NAND flash growth driver over the next several years as SSDs increasingly
replace hard disk drives in client devices, and enterprise and hyperscale data centers.
Our Sales Channels
Our revenue is generated through the following channels:
•Commercial. Our Commercial channel represents sales directly and through distributors to OEMs,
system integrators and value-added resellers who bundle, embed or integrate our data storage
solutions. Our Commercial channel addresses a large variety of applications, including mobile
phones, tablets, notebooks, gaming devices, enterprise storage solutions, servers and other
computing devices. We also sell our data storage solutions to customers in our Commercial channel
that offer our products under their own brand name in retail channels. We generate license and
royalty revenue related to intellectual property, or IP, and this revenue is also included in our
Commercial revenue.
•Retail. We sell our products directly and through distributors to consumer electronics stores, office
superstores, photo retailers, mobile phone stores, mass merchants, catalog and mail order
companies, e-commerce retailers, drug stores, supermarkets, convenience stores and kiosks in a
wide variety of locations. We sell to our Retail channel through our direct sales representatives as
well as through independent manufacturers’ representatives.
Backlog
As of the end of fiscal years 2013 and 2012, our backlog was $296 million and $278 million,
respectively. Because our customers can generally change or cancel orders with limited or no penalty and
limited advance notice prior to shipment, we do not believe that our backlog, as of any particular date, is
indicative of future sales.
Seasonality
Because the majority of our products are ultimately sold to consumers, our annual revenue is
generally highest in our fourth fiscal quarter due to the holiday buying season. In addition, our annual
revenue is generally lowest in our first fiscal quarter.
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