Seagate 2015 Annual Report Download - page 25
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Causesofdeclinesindemandforourproductsinthepasthaveincludedweaknessinmacroeconomicenvironments,announcementsorintroductionsofmajor
newoperatingsystemsorsemiconductorimprovementsorchangesinconsumerpreferences,suchastheshifttomobiledevices.Webelievetheseannouncements
andintroductionshavefromtimetotimecausedconsumerstodefertheirpurchasesandmadeinventoryobsolete.Wheneveranoversupplyofourproductscauses
participantsinourindustrytohavehigherthananticipatedinventorylevels,weexperienceevenmoreintensepricecompetitionfromothermanufacturersthan
usual.
Increasesinthearealdensityofdiskdrivesmayoutpacecustomers'demandforstoragecapacity.
Therateofincreaseinarealdensity,orstoragecapacitypersquareinchonadisk,maybegreaterthantheincreaseinourcustomers'demandforaggregate
storagecapacity,particularlyincertainmarketapplicationslikeclientcompute.Asaresult,ourcustomers'storagecapacityneedsmaybesatisfiedwithlower
priced,lowcapacitydiskdrives.Thesefactorscoulddecreaseoursales,especiallywhencombinedwithcontinuedpriceerosion,whichcouldadverselyaffectour
resultsofoperations.
Wemaynotbesuccessfulinoureffortstogrowourcloudsystemsandsolutionsbusiness.
Wehavemadeandarecontinuingtomakeinvestmentstoexpandanddevelopourcloudsystemsandsolutionsbusiness.Ourcloudsystemsandsolutions
businessissubjecttothefollowingrisks:
•thecloudsystemsandsolutionsmarketmaydevelopmoreslowlythanweexpect;
•wemaynotbeabletooffercompellingsolutionstoenterprisesandconsumers;and
•ourcloudsystemsandsolutionsbusinessgenerallyhasalongandunpredictablesalescycle,andgrowthinthisbusinessislikelytodependon
relativelylargecustomerorders,whichmayincreasethevariabilityofourresultsofoperationsandthedifficultyofmatchingrevenueswith
expenses.
Ourresultsofoperationsandsharepricemaybeadverselyaffectedifwearenotsuccessfulinoureffortstogrowourcloudcomputingbusinessasanticipated.
Inaddition,ourgrowthinthissectormaybringusintoclosercompetitionwithsomeofourcustomersorpotentialcustomers,whichmaydecreasetheirwillingness
todobusinesswithus.
Changesinthemacroeconomicenvironmenthavenegativelyimpacted,andmaycontinueto,negativelyimpactourresultsofoperations.
Duetothecontinuinguncertaintyaboutcurrentmacroeconomicconditionsaffectingconsumerandenterprisespending,webelieveourcustomersmay
postponespendinginresponsetotightercredit,unemployment,negativefinancialnewsand/ordeclinesinincomeorassetvalues,whichcouldhaveamaterial
adverseeffectonthedemandforourproducts.Continuinghighunemploymentrates,lowlevelsofconsumerliquidity,riskofdefaultonsovereigndebtand
volatilityincreditandequitymarketshaveweakenedconsumerconfidenceanddecreasedconsumerandenterprisespendinginmanyregionsaroundtheworld.
Otherfactorsthatcouldinfluencedemandincludeconditionsintheresidentialrealestateandmortgagemarkets,laborandhealthcarecosts,accesstocredit,
consumerconfidenceandothermacroeconomicfactorsaffectingconsumerspendingbehavior.Theseandothereconomicfactorscouldhaveamaterialadverse
effectondemandforourproductsandonourfinancialconditionandoperatingresults.
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