Seagate 2015 Annual Report Download - page 23

TableofContents
comparedtonewproducts.Asaresult,evenifweareamongthefirst-to-maturity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.
Ifwecannotsuccessfullydelivercompetitiveproducts,ourfutureresultsofoperationsmaybeadverselyaffected.
Ourindustriesarehighlycompetitiveandourfailuretoanticipateandrespondtotechnologicalandmarketdevelopmentscouldharmourabilitytocompete.
Weoperateinmarketsthatarehighlycompetitiveandsubjecttorapidchangeandthataresignificantlyaffectedbynewproductintroductions,substantial
priceerosionandlowerpricesaspartofastrategytogainorretainmarketshareandcustomers.Shouldthesepracticescontinue,wemayneedtocontinually
reduceourpricesforexistingproductstoretainourmarketshare,whichcouldadverselyaffectourresultsofoperations.
Ourabilitytooffsettheeffectofpriceerosionthroughnewproductintroductionsathigheraveragepricesisdiminishedtotheextentcompetitorsintroduce
productsintoparticularmarketsaheadofoursimilar,competingproducts.Ourabilitytooffsettheeffectofpriceerosionisalsodiminishedduringtimeswhen
supplyexceedsdemandforaparticularproduct.
Marketshareforourproductscanbenegativelyaffectedbyourcustomers'diversifyingtheirsourcesofsupplyasourcompetitorsenterthemarketfor
particularproducts,aswellasbyourabilitytorampvolumeproductionofnewproductofferings.Whenourcompetitorssuccessfullyintroduceproductofferings
thatarecompetitivewithourrecentlyintroducedproducts,ourcustomersmayquicklydiversifytheirsourcesofsupply.Anysignificantdeclineinourmarketshare
inanyofourprincipalmarketapplicationswouldadverselyaffectourresultsofoperations.
Ourprincipalsourcesofcompetitioninclude:
•diskdrivemanufacturers,suchasWesternDigitalCorporationandToshiba;
•companiesprovidingstoragesubsystemsandcomponentstoOEMs;
•electronicmanufacturingservices("EMS")companiesacquiringthenecessaryskillsandintellectualpropertytoentertheenterprisedatastorage
marketplace;
•otherhighperformancecomputing("HPC")datastorageproviders;and
•collaborationsbetweenin-housedevelopmentteamsofexistingandpotentialcustomersandacombinationofEMS,contractelectronic
manufacturing("CEM")oremergingtechnologycompanies.
Wealsoexperiencecompetitionfromothercompaniesthatproducealternativestoragetechnologieslikeflashmemory,whereincreasingcapacity,decreasing
cost,energyefficiencyandimprovementsinperformanceruggednesshaveresultedincompetitionwithourlowercapacity,smallerformfactordiskdrives.This
competitionhastraditionallybeeninthemarketsforhandheldconsumerelectronicsapplicationsandnowitalsoincludessolidstatedrives("SSDs")fortablet,
notebookandenterprisecomputeapplications.CertaincustomersforbothnotebookandenterprisecomputeapplicationsareadoptingSSDsasalternativestohard
drivesincertainapplications.Furtheradoptionofthesealternativestoragetechnologiesmayimpactthecompetitivenessofourproductportfolioandreduceour
marketshareandadverselyaffectourresultsofoperation.
Themarketsforourdatastoragesystemproductsarealsocharacterizedbytechnologicalchangedriveninpartbytheadoptionofnewindustrystandards.
Thesestandardsprovidemechanismstoensuretechnologycomponentinteroperabilitycanoccurandmayreduceourcapabilityfordifferentiationorinnovation
andouraffectedproductswouldreverttocommoditystatus.Thiscouldlowerthebarriersto
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