Seagate 2014 Annual Report Download - page 21

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TableofContents
•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.Oncea
productisaccepted,anyfailureordelayinthequalificationprocessorarequirementthatwerequalifycanresultinourlosingsalestothatcustomeruntilnew
productsareintroduced.Thelimitednumberofhigh-volumeOEMsmagnifiestheeffectofmissingaproductqualificationopportunity.Theserisksarefurther
magnifiedbecauseweexpectcompetitivepressurestoresultindecliningsales,erodingprices,anddeclininggrossmarginsonourcurrentgenerationproducts.If
thedeliveryofourproductsisdelayed,ourOEMcustomersmayuseourcompetitors'productstomeettheirproductionrequirements.Wecannotassurethatwe
willbeamongtheleadersintime-to-marketwithnewproductsorthatwewillbeabletosuccessfullyqualifynewproductswithourcustomersinthefuture.
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
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