Seagate 2005 Annual Report Download - page 6

Table of Contents
operations of Maxtor and the right to use the Maxtor brand and other related trade names. The acquisition has also provided us access to
talented personnel in the branded solution, product development, and other key functional areas.
We are engaged in integration and restructuring processes whereby we are driving to replace Maxtor-designed disc drive products with
Seagate-designed disc drive products. We expect this process to be substantially complete by the end of calendar year 2006. We foresee there
to be a transitional period through the first six months of fiscal year 2007 during which we expect the inefficient use of the Maxtor
manufacturing infrastructure as we wind down the volume of Maxtor-designed disc drive products and incur up-front investment needed for
capacity additions to support the ramp-up of Seagate-designed disc drive products. In addition, work force reductions took place after the
transaction closed as we addressed the redundancies that exists between the two companies and will continue to be implemented based on
production transitions, customer support and administrative requirements.
Industry
Demand for Electronic Data Storage
We believe that the amount of data stored and accessed electronically is growing rapidly and that there are a number of key factors
driving this demand. We are particularly focused on three areas of growing demand for disc drives:
Growth in Disc Drives for Consumer Electronics . High-performance computing and communications functions and, increasingly, disc
drives are being incorporated into consumer electronics devices such as digital video recorders, digital music players, video game consoles and
advanced television set-top boxes. In addition, faster connections to the Internet and increased broadband capacity have encouraged consumers
to download greater amounts of text, video and audio data, expanding the market for disc drives for use in new consumer and entertainment
appliances. The adoption and rapid growth of the use of disc drives in these applications will be facilitated by the development of low-cost disc
drives that meet the pricing requirements of the consumer electronics market.
Growth in Disc Drives for Mobile Computing. The mobile computing market is expected to grow faster than any other personal
computer segment as price and performance continue to improve, placing notebook computers in an attractive position relative to desktop
computers. Notebook systems are increasingly becoming replacement systems to desktop computers and progressively more desirable to
consumers as the need for mobility increases and wireless adoption continues to advance.
Growth of Storage Area Networks and Network Attached Storage . The need to address the dramatic expansion in data storage
management requirements has spurred the evolution of new storage and data management technologies. Enterprises are increasingly offloading
network traffic to dedicated storage area networks, or SANs. In addition, many enterprises are moving away from the use of server-attached
storage to network-attached storage, or NAS. These solutions combine high-performance storage products that are comprised principally of
disc drives with sophisticated software and communications technologies. We expect that the market for these solutions will grow rapidly and
will result in greater opportunities for the sale of high-performance, high-capacity disc drives.
An emerging application in enterprise storage is the use of business critical storage systems. These systems use higher capacity disc
drives to access less frequently needed data that historically have been addressed by tape or other backup and archival technologies.
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