Western Digital 2007 Annual Report Download - page 5

Our first 3.5-inch WD Caviar drives that implement PMR produce up
to 750 GB and have a unique combination of WD features that reduce
power, operate at low temperatures and offer high shock and vibration
tolerance. Off the same platform are the WD RE2TM drives, which offer
enterprise customers three-quarters of a terabyte for high-duty cycle
applications such as servers and capacity-intensive network storage.
Our Branded Products team leveraged the new capacity with a family of
cavernous dual-drive 1.5 TB My Book products.
Newly introduced to Branded Products’ lineup was the My DVR ExpanderTM
external DVR storage, which solves a growing consumer need for massive
capacity to manage high-definition TV entertainment. This plug and play
device adds as many as 60 hours of high-definition recording or up to
300 hours of standard-definition TV programming to widely installed cable
set-top box DVRs.
This is a great time to be involved in the global hard drive industry.
Applications for hard drives continue to proliferate in both computing and
consumer markets as both workplace and lifestyle changes continue to
generate massive volumes of content to be stored securely, conveniently
and cost effectively on hard drives.
• The hard drive market in 2006 generated revenues in excess of
$30 billion with 435 million hard drives shipped; forecasted demand
for 2007 exceeds 500 million units.
• On a unit basis, the hard drive market is looking at a five-year CAGR of
approximately 13 percent.
• The strongest growth segments are expected to be Enterprise SATA,
forecasted for nearly 40 percent growth, 3.5-inch CE at more than 30
percent, 2.5-inch notebook and 2.5-inch CE each above 20 percent.
• Branded Products, a category which has surged to industry prominence
in the last year, is forecasted to grow at a rate of 25 percent over the
next five years as consumers and increasingly mobile workers continue
to seek intuitive, well-designed external storage appliances to securely
store and access their digital content.
At WD, we are very excited about these numerous opportunities for
growth, both for the near term, and as we address the longer-term
prospects represented in these industry forecasts.
We have taken important steps to ensure our continued success in
addressing these outstanding market opportunities.
• We have made and continue to make investments in the technologies
and infrastructure that will enhance our ability to compete as a full-line
industry leader, with the product portfolio required to capitalize on these
growth trends and the capacity and cost structure to do so efficiently
and profitably.
• Our previously announced plan to upgrade and expand our Fremont,
California wafer facility is underway. Our first 8-inch pilot line is
expected to be in production by the end of calendar 2008.
• Our recent acquisition of Komag Incorporated, a leading media supplier,
is a very important strategic step that we believe will deliver significant
advantages and synergies over the long term as we vertically integrate
media into our operations.
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As a result of WD’s activity in newer markets, we have
seen our revenue from non-desktop PC drives expand
to 43% of revenue in fiscal 2007, compared with 29%
in fiscal 2006.
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Our Branded Products revenue grew to 16% of total
revenue, up from 7% in fiscal 2006.