Seagate 2004 Annual Report Download - page 11

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Table of Contents
OEM customers typically enter into master purchase agreements with us. These agreements provide for pricing, volume discounts, order
lead times, product support obligations and other terms and conditions. The term of these agreements is usually 12 to 36 months, although our
product support obligations generally extend substantially beyond this period. These master agreements typically do not commit the customer
to buy any minimum quantity of products, or create exclusive relationships. Deliveries are scheduled only after receipt of purchase orders. In
addition, with limited lead-time, customers may cancel or defer most purchase orders without significant penalty. Anticipated orders from
many of our customers have in the past failed to materialize or OEM delivery schedules have been deferred or altered as a result of changes in
their business needs.
Our distributors generally enter into non-exclusive agreements for the redistribution of our products. They typically furnish us with a non-
binding indication of their near-term requirements and product deliveries are generally scheduled based on a weekly confirmation by the
distributor of its requirements for that week. The agreements typically provide the distributors with price protection with respect to their
inventory of our disc drives at the time of a reduction by us in our selling price for the disc drives and also provide limited rights to return the
product.
We also regularly enter into agreements with our customers, which obligate us to provide a limited indemnity against losses resulting
from intellectual property claims. These agreements are customary in our industry and typically require us to indemnify our customer against
certain damages and costs incurred as a result of third party intellectual property claims arising as a result of their use of our products.
Sales, Marketing and Customer Service
Our sales organization focuses on deepening our relationship with our customers. The worldwide sales group focuses on geographic
coverage of OEMs and distributors throughout most of the world. The worldwide sales group is organized regionally among North America,
Japan, Asia-Pacific (excluding Japan) and Europe, Africa and the Middle East. In addition, we have a sales operation group which focuses on
aligning our production levels with customers’ product requirements. Our sales force works directly with our marketing organization to
coordinate our OEM and distribution channel relationships. We maintain sales offices throughout the United States and in Australia, China,
England, France, Germany, India, Ireland, Japan, Singapore and Taiwan.
Our marketing organization works to increase demand for our disc drive products through strategic collaboration with key OEM
customers to align our respective product roadmaps and to build our brand and end-customer relationships. This organization is comprised of
our strategic marketing, business development and marketing communications groups. Our strategic marketing group coordinates with our
research and development group to align our product development roadmap to meet key OEM customers’ technology requirements over the
long term. Additionally, we continually align our marketing organization to reflect customer needs and market trends. Our business
development group coordinates the qualification of new products with OEMs, determines product pricing and provides product service and
support. Our marketing communications group focuses on building the Seagate brand name among our OEM and distribution channel
customers.
We warrant our products for periods ranging from one year to five years, and effective June 1, 2004, we extended our standard warranty
from one year to five years on all internal desktop and notebook disc drives shipped through the distribution and retail channels.
Foreign sales are subject to foreign exchange controls and other restrictions, including, in the case of some countries, approval by the
Office of Export Administration of the U.S. Department of Commerce and other U.S. governmental agencies.
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