Seagate 2008 Annual Report Download - page 14

Table of Contents
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 resale of our products. They typically furnish us with a non-binding
indication of their near-term requirements and product deliveries are generally scheduled accordingly. The agreements and related sales
programs typically provide the distributors with limited right of return and price protection rights. In addition, we offer sales programs to
distributors on a quarterly and periodic basis to promote the sale of selected products in the sales channel.
Our branded storage product is sold to retailers either by us directly or by our distributors. Retail sales made by us or our distributors
typically require greater marketing support, sales incentives and price protection periods. We have increased our sales and market penetration of
branded storage products to retail customers over the last two years further expanding our retail customer base.
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 customers 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.
The only customer exceeding 10% of our disk drive revenue for all of fiscal years 2007 through 2009 was HP, accounting for
approximately 16% of our disk drive revenue in each year. Dell exceeded 10% of our disk drive revenue in fiscal years 2009 and 2008. Sales to
Dell accounted for approximately 11%, 11% and 9% of our disk drive revenue in fiscal years 2009, 2008 and 2007, respectively. We have
master purchase agreements in place with HP and Dell that are cancelable for convenience by either party upon written notice, and do not require
either customer to purchase any minimum or other specified quantity of our products. No other customer accounted for 10% or more of our disk
drive revenue in fiscal years 2009, 2008 or 2007. See "Item 1A. Risk Factors—Risks Related to Our Business—Dependence on Key
Customers—We may be adversely affected by the loss of, or reduced, delayed or cancelled purchases by, one or more of our larger customers."
Sales, Marketing, Product Line Management and Customer Service
Our Product Line Management (PLM) organization works to increase demand for our disk drive products through strategic collaboration
with key OEM customers and distribution partners to align our respective product roadmaps and to 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 Product Line
Management and Marketing organizations to coordinate our OEM and distribution channel relationships. We maintain sales offices throughout
the United States and in Australia, China, France, Germany, India, Japan, Taiwan and the United Kingdom.
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