Seagate 2007 Annual Report Download - page 6

Table of Contents
PART I
ITEM 1.
BUSINESS
We are the world’
s leading provider of hard disc drives, based on revenue and units shipped. We design, manufacture, market and sell hard
disc drives. Hard disc drives, commonly referred to as disc drives or hard drives, are devices that store digitally encoded data on rapidly rotating
platters or discs with magnetic surfaces. The performance attributes of disc drives, including their cost effectiveness and high storage capacities
has resulted in disc drives being used as the primary medium for storing electronic data in systems ranging from desktop and notebook
computers, and consumer electronics devices to data centers delivering electronic data over corporate networks and the Internet.
We produce a broad range of disc drive products addressing enterprise applications, where our products are used in enterprise servers,
mainframes and workstations; desktop applications, where our products are used in desktop computers; mobile computing applications, where
our products are used in notebook computers; and consumer electronics applications, where our products are used in a wide variety of devices
such as digital video recorders (DVRs), gaming devices and other consumer electronic devices that require storage. We also sell our branded
storage solutions under both the Seagate and Maxtor brands. In addition to manufacturing and selling disc drives, we provide data storage
services for small- to medium-sized businesses, including online backup, data protection and recovery solutions.
We sell our disc drives primarily to major original equipment manufacturers (OEMs) and we also market to distributors under our globally
recognized brand names. We have longstanding relationships with many of our OEM customers including Hewlett-Packard Company (“HP”),
Dell Inc. (“Dell”), EMC Corporation (“EMC”), International Business Machines Corporation (“IBM”) and Lenovo Group Limited (“Lenovo”).
For the fiscal years 2008, 2007 and 2006 approximately 67%, 64% and 72%, respectively, of our disc drive revenue was from sales to OEMs.
We also have key relationships with major distributors who sell our disc drive products to small OEMs, dealers, system integrators and retailers
throughout most of the world. Shipments to distributors were approximately 26%, 30% and 25% of our disc drive revenue in fiscal years 2008,
2007 and 2006, respectively. Retail sales of our branded storage products in fiscal year 2008, as a percentage of our disc drive revenue, were 7%,
compared to 6% and 3% in fiscal years 2007 and 2006, respectively. For fiscal years 2008, 2007 and 2006, approximately 30% of our disc drive
revenue came from customers located in North America, approximately 27% came from customers located in Europe and approximately 43%
came from customers located in the Far East. The only customer exceeding 10% of our disc drive revenue for fiscal years 2006 through 2008
was HP. Dell exceeded 10% of our disc drive revenue in fiscal years 2008 and 2006. Substantially all of our revenue is denominated in
U.S. dollars.
Industry Overview
Electronic Data Storage Industry
The electronic data storage industry is comprised of companies that provide storage solutions through a variety of technologies such as disc
drives, tape storage, as well as semiconductor-based storage technologies such as flash memory. Participants in the electronic data storage
industry include:
Major subcomponent manufacturers.
Companies that manufacture components or subcomponents used in electronic data storage devices
or solutions include companies such as TDK Corporation (“TDK”), Fuji Electric Device Technology Co., Ltd. (“Fuji”), and Showa Denko K.K.
(“Showa”), that supply heads and media to disc drive manufacturers as well as semiconductor companies such as Samsung Electronics Co. Ltd
(“Samsung”), SanDisk Corporation (“SanDisk”), Micron Technology, Inc. (“Micron”), and Intel Corporation (“Intel”), who each manufacture
flash memory.
Hardware storage solutions manufactures.
Companies that transform components into storage products include disc drive manufacturers
such as Seagate Technology, Western Digital Corporation (“Western Digital”),
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