Seagate 2013 Annual Report Download - page 48

Table of Contents
• Contractual Obligations and Off-Balance-Sheet Arrangements. Overview of contractual obligations and contingent liabilities
and commitments outstanding as of June 27, 2014 and an explanation of off-balance-sheet arrangements.
• Critical Accounting Estimates. Accounting estimates that we believe are important to understanding the assumptions and
judgments incorporated in our reported financial results.
Our Company
We are a leading provider of electronic data storage solutions. Our principal products are hard disk drives, commonly referred to as disk
drives, hard drives or HDDs. Hard disk drives are devices that store digitally encoded data on rapidly rotating disks with magnetic surfaces. Disk
drives continue to be the primary medium of mass data storage due to their performance attributes, high quality and cost effectiveness. In
addition to HDDs, we produce a broad range of electronic data storage products including solid state hybrid drives ("SSHD") and solid state
drives ("SSD").
Our products are designed for enterprise servers, and storage systems in mission critical and nearline applications; client compute
applications, where our products are designed primarily for desktop and mobile computing; and client non-compute applications, where our
products are designed for a wide variety of end user devices such as digital video recorders ("DVRs"), personal data backup systems, portable
external storage systems and digital media systems.
We continue to make strategic investments in order to expand our storage solutions, enter new market adjacencies, and expand our technical
expertise. As a result of recent acquisitions, our product and solution portfolio for the enterprise data storage industry includes storage
enclosures, integrated application platforms and high performance computing ("HPC") data storage solutions. Our storage subsystems support a
range of high-speed interconnect technologies to meet demanding cost and performance specifications. Our modular subsystem architecture
allows us to support many segments within the networked storage market by enabling different specifications of storage subsystem designs to be
created from a standard set of interlocking technology modules.
In addition to our data storage products and subsystems, we provide data storage services for small to medium-sized businesses, including
online backup, data protection and recovery solutions.
Business Overview
Our industry is characterized by several trends and factors that have a material impact on our strategic planning, financial condition and
results of operations.
Industry Supply Balance
From time to time the industry has experienced periods of imbalance between supply and demand. To the extent that the disk drive industry
builds capacity based on expectations of demand that do not materialize, price erosion may become more pronounced. Conversely, during
periods where demand exceeds supply, price erosion is generally muted.
In early October 2011, floodwaters north of Bangkok, Thailand inundated many manufacturing industrial parks that contained a number of
the factories supporting the HDD industry's supply chain. The HDD industry had concentrated a large portion of its supply chain participants
within these industrial parks in an effort to reduce cost and improve logistics. As a result, the inundation of floodwaters into these industrial
parks had caused the closure or suspension of production by a number of participants within the HDD supply chain.
During the supply chain disruption in fiscal year 2012, we believe demand exceeded supply due to the impact from the flooding in
Thailand, resulting in an increase in the average selling price ("ASP").
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