Seagate 2008 Annual Report Download - page 15

Table of Contents
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 one 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. Disk drive manufacturers not only compete for a limited number of major disk
drive customers but also compete 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 disk drive products are competitive with respect to each of
these factors in the markets that we currently address.
We summarize below our principal disk drive competitors, other competitors, the effect of competition on price erosion for our products
and product life cycles and technology.
Principal Disk 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
disk drive manufacturers such as Western Digital, as well as large captive manufacturers such as Fujitsu, Hitachi, Samsung and Toshiba.
Because these captive manufacturers produce complete computer systems and other non-
compute consumer electronics and mobile devices, they
can derive a greater portion of their operating margins from other components, which may reduce their need to realize a profit on the disk drives
included in their computer systems and may allow them to sell disk drives to third parties at very low margins. Many captive manufacturers are
also formidable competitors because they have more resources and greater access to their internal customers than we do. In addition, competitors
such as Samsung and Toshiba, are increasingly integrating other storage technologies such as flash memory, hybrid disk drives and SSDs into
their product offerings. Not only may they be willing to sell their disk drives at a lower margin to advance their overall business strategy, their
portfolio may allow them to be indifferent to which technology prevails over the other as 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 competing with
our disk drive competitors, we also compete with companies such as Iomega Corporation (an EMC company) and LaCie S.A. that purchase disk
drives from us and our competitors for use in their branded storage products.
Other Competitors. We also are experiencing competition from companies that provide alternative storage technologies such as flash
memory and SSDs. In the flash memory market, primarily used in lower capacity handheld devices, the principal competitors include Micron
Technology, Inc. ("Micron"), Samsung, SanDisk and Toshiba. In enterprise applications where SSDs are used for rapid processing and high
volume transactions, our principal competitors include Hitachi and STEC.
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