Seagate 2013 Annual Report Download - page 23

Table of Contents
• uncertainty in the amount of purchases from our distributor customers who from time to time constitute a large portion of our
total sales;
• our product mix and the related margins of the various products;
• accelerated reduction in the price of our disk drives due to technological advances and/or an oversupply of disk drives in the
market and shifting trends in demand which can create supply and demand imbalances;
• manufacturing delays or interruptions, particularly at our manufacturing facilities in China, Malaysia, Northern Ireland,
Singapore, Thailand, the United Kingdom, or the United States;
• limited access to components that we obtain from a single or a limited number of suppliers;
• the impact of changes in foreign currency exchange rates on the cost of producing our products and the effective price of our
products to foreign consumers; and
• operational issues arising out of the increasingly automated nature of our manufacturing processes.
In addition, the demand for client non-compute products can be even more volatile and unpredictable than the demand for client compute
products. In some cases, our products manufactured for client non-compute applications are uniquely configured for a single customer's
application, which creates a risk of unwanted and unsellable inventory if the anticipated volumes are not realized. This potential for
unpredictable volatility is increased by the possibility of competing alternative storage technologies like flash memory meeting the customers'
cost and capacity metrics, resulting in a rapid shift in demand from our products and disk drive technology, generally, to alternative storage
technologies. Unpredictable fluctuations in demand for our products or rapid shifts in demand from our products to alternative storage
technologies in new client non-compute applications could materially adversely impact our future results of operations.
Market acceptance of new product introductions cannot be accurately predicted, and our results of operations will suffer if there is less
demand for our new products than is anticipated.
The markets for our products are characterized by rapid technological change, frequent new product introductions and technology
enhancements, uncertain product life cycles and changes in customer demand. The success of our new product introductions is dependent on a
number of factors, including market acceptance, our ability to manage the risks associated with product transitions, the effective management of
inventory levels in line with anticipated product demand and the risk that our new products will have quality problems or other defects in the
early stages of introduction that were not anticipated in the design of those products. Accordingly, we cannot accurately determine the ultimate
effect that our new products will have on our results of operations.
Historically, our results of operations have substantially depended upon our ability to be among the first-to-maturity 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-maturity 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.
In addition, the success of our new product introductions is dependent upon our ability to qualify as a primary source of supply with our
OEM customers. In order for our products to be considered by our customers for qualification, we must be among the leaders in time-to-market
with those new products.
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