Seagate 2014 Annual Report Download - page 15

Download and view the complete annual report

Please find page 15 of the 2014 Seagate annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

TableofContents
PrincipalDiskDriveCompetitors.Therearethreecompaniesintheelectronicdatastorageindustrythatmanufacturediskdrives:
•Seagate,sellingtheSeagate,LaCie,andSamsungbrands;
•WesternDigitalCorporation,operatingtheWesternDigitalandHitachiGlobalStorageTechnologiessubsidiaries;and
•ToshibaCorporation
OtherCompetitors.Wemayinthefuturefaceindirectcompetitionfromcustomerswhofromtimetotimeevaluatewhethertoofferelectronicdatastorage
productsthatmaycompetewithourproducts.
PriceErosion.Historically,ourindustryhasbeencharacterizedbypricedeclinesfordiskdriveproductswithcomparablecapacity,performanceandfeature
sets("like-for-likeproducts").Pricedeclinesforlike-for-likeproducts("priceerosion")havebeenmorepronouncedduringperiodsof:
•economiccontractioninwhichcompetitorsmayusediscountedpricingtoattempttomaintainorgainmarketshare;
•fewnewproductintroductionswhencompetitorshavecomparableoralternativeproductofferings;and
•industrysupplyexceedingdemand.
Diskdrivemanufacturerstypicallyattempttooffsetpriceerosionwithanimprovedmixofdiskdriveproductscharacterizedbyhighercapacity,better
performanceandadditionalfeaturesetsand/orproductcostreductions.
WebelievetheHDDindustryexperiencedbenignpriceerosioninfiscalyears2013,2014andmoderatepriceerosioninfiscalyear2015.
ProductLifeCyclesandChangingTechnology.Successinourindustryhasbeendependenttoalargeextentontheabilitytobalancetheintroductionand
transitionofnewproductswithtime-to-volume,performance,capacityandqualitymetricsatacompetitiveprice,levelofserviceandsupportthatourcustomers
expect.Generally,thedrivemanufacturerthatintroducesanewproductfirstbenefitsfromimprovedproductmix,favorableprofitmarginsandlesspricing
pressureuntilcomparableproductsareintroduced.Changingtechnologyalsonecessitateson-goinginvestmentsinresearchanddevelopment,whichmaybe
difficulttorecoverduetorapidproductlifecyclesandeconomicdeclines.Further,thereisacontinuedneedtosuccessfullyexecuteproducttransitionsandnew
productintroductions,asfactorssuchasquality,reliabilityandmanufacturingyieldscontinuetobeofsignificantcompetitiveimportance.
Seasonality
Thediskdriveindustrytraditionallyexperiencesseasonalvariabilityindemandwithhigherlevelsofdemandinthesecondhalfofthecalendaryear.This
seasonalityisdrivenbyconsumerspendingintheback-to-schoolseasonfromlatesummertofallandthetraditionalholidayshoppingseasonfromfalltowinter.In
fiscalyears2013and2014,ourindustryexperiencedmutedseasonalpatternsassupplyanddemandwererelativelyinbalance.However,webelievefiscalyear
2015reflectedaseasonalpatternconsistentwithhistoricalpatterns.
ResearchandDevelopment
Wearecommittedtodevelopingnewcomponenttechnologies,productsandalternativestoragetechnologies.Ourresearchanddevelopmentfocusisdesigned
tobringnewproductstomarketinhighvolume,withqualityattributesthatourcustomersexpect,beforeourcompetitors.Partofourproductdevelopmentstrategy
istoleverageadesignplatformand/orsubsystemwithinproductfamiliestoserve
12