Seagate 2007 Annual Report Download - page 15

Table of Contents
build our brand and end-customer relationships. As customers and markets increasingly demand a broad variety of products with different
performance and cost attributes, we have marketing groups focused on the strategic needs of our increasingly diverse customer base. We believe
this enables us to serve both our core markets and better identify, develop and serve emerging markets.
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 by customer type and regionally
among Americas, 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, France, Germany, Japan, Singapore, Taiwan and the United Kingdom.
With the acquisition of Maxtor, we acquired the right to the use the Maxtor and other related brand names. We believe the Maxtor brand is
a valuable asset, and we intend to continue to offer the Maxtor brand of products to consumers globally to broaden our reach into and coverage
of these channels as well as optimize the impact of our marketing investments.
Our customer service organization maintains a global network of service points to process warranty returns and manage outsourced repair
vendors. We generally warrant our products for periods ranging from three to five years.
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.
Competition
The markets that we compete in are intensely competitive, with disc drive manufacturers not only competing for a limited number of major
disc drive customers, but also increasingly competing with other companies in the electronic data storage industry that provide alternative
storage solutions, such as flash memory, tape, optical and SSDs. Some of the principal factors used by customers to differentiate among
electronic data storage solutions manufacturers are storage capacity; price per unit and price per gigabyte; storage/retrieval access times; data
transfer rates; product quality and reliability; supply continuity; form factor; warranty; and brand.
We believe that our disc drive products are competitive with respect to each of these factors in the markets that we currently address. We
summarize below our principal disc drive competitors, other competitors, the effect of competition on price erosion for our products and product
life cycles and technology.
Principal Disc Drive Competitors. We have experienced and expect to continue to experience intense competition from a number of
domestic and foreign companies, some of which have greater financial and other resources than we have. These competitors include independent
disc drive manufacturers such as Western Digital, as well as large captive manufacturers such as Fujitsu, Samsung, Hitachi, and Toshiba.
Because they produce complete computer systems and other non-compute consumer electronics and mobile devices, these “captive
manufacturers” can derive a greater portion of their operating margins from other components, which reduces their need to realize a profit on the
disc drives included in their computer systems and allows them to sell disc drives to third parties at very low margins. Many captive
manufacturers are also formidable competitors because they have more substantial resources and greater access to their internal customers than
we do. In addition, Toshiba and Samsung, each are increasingly integrating other storage technologies such as flash memory, hybrid disc drives
and SSDs into its product offerings. Not only may they be willing to sell their disc drives at a lower margin to advance their overall business
strategy, their portfolio allows them to be indifferent to which technology prevails over the other. They can offer a broad range of storage media
and solutions and focus on those with lowest costs and greatest sales. In connection with our branded storage products, in addition to
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