Seagate 2009 Annual Report Download - page 27

Table of Contents
Importance of Time
-to-Market—Our results of operations may depend on our being among the first-to-market with new product offerings
and achieving sufficient production volume with our new products.
To achieve consistent success with our OEM customers, it is important that we be an early provider of new types of disk drives featuring
leading, high-quality technology and lower per gigabyte storage cost. Historically, our results of operations have substantially depended upon
our ability to be among the first-to-market with new product offerings. Our market share and results of operations in the future may be adversely
affected if we fail to:
• consistently maintain our time-to-market performance with our new products;
• produce these products in sufficient volume;
•
qualify these products with key customers on a timely basis by meeting our customers' performance and quality specifications; or
• achieve acceptable manufacturing yields, quality and costs with these products.
If the delivery of our products is delayed, our OEM customers may use our competitors' products to meet their production requirements. If
the delay of our products causes delivery of those OEMs' computer systems into which our products are integrated to be delayed, consumers and
businesses may purchase comparable products from the OEMs' competitors.
We face the related risk that consumers and businesses may wait to make their purchases if they want to buy a new product that has been
shipped or announced but not yet released. If this were to occur, we may be unable to sell our existing inventory of products that may be less
efficient and cost effective compared to new products. As a result, even if we are among the first-to-market with a given product, subsequent
introductions or announcements by our competitors of new products could cause us to lose revenue and not achieve a positive return on our
investment in existing products and inventory.
Industry Demand
—Poor global economic conditions and changes in demand for computer systems and storage subsystems may cause in the
future a decline in demand for our products.
Our disk drives are components in computers, computer systems, storage subsystems and consumer electronics devices. The demand for
these products has been volatile. During times of poor global economic conditions, consumer spending tends to decline and retail demand for
personal computers and consumer electronics devices tends to decrease, as does enterprise demand for computer systems and storage
subsystems. Moreover, unexpected slowdowns in demand for computer systems, storage subsystems or consumer electronics devices generally
cause sharp declines in demand for disk drive products. The decline in consumer spending could have a material adverse effect on demand for
our products and services and on our financial condition and results of operations.
Additional causes of declines in demand for our products in the past have included announcements or introductions of major new operating
systems or semiconductor improvements or changes in consumer preferences, such as the shift from desktop to notebook computers. We believe
these announcements and introductions have from time to time caused consumers to defer their purchases and made inventory obsolete.
Whenever an oversupply of disk drives causes participants in our industry to have higher than anticipated inventory levels, we experience even
more intense price competition from other disk drive manufacturers than usual.
Dependence on Distributors
—We are dependent on sales to distributors and retailers, which may increase price erosion and the volatility of
our sales.
A substantial portion of our sales has been to distributors of disk drive products. Certain of our distributors may also market other products
that compete with our products. Product qualification programs in this distribution channel are limited, which increases the number of competing
products that
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