Western Digital 2008 Annual Report Download - page 11

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Industry
We design, develop and manufacture hard drives for the desktop and mobile PC, enterprise, CE and branded product
retail markets. We believe that growth in the sales of hard drives has continued to outpace the growth in the sales of all PCs as
there were approximately 88% more hard drives sold in the market than PCs in calendar 2007, based on industry data. We
believe the following factors continue to drive this accelerating growth of hard drive sales in addition to PC applications:
• consumer use of hard drives for the playing, retention, and creation of digital content for personal use in the
rapidly growing CE market;
• growth of the external hard drive or branded products market, permitting the easy storage, portability and
backup of digital data such as music, photographs, or video;
• increased use of multiple hard drives in PCs for data backup and expanded storage capacity; and
• increased use of multiple cost-optimized high performance hard drives in data-intensive applications such as
Internet search engines and in hard drive intensive hosts for handheld computing devices.
Additionally, we believe that the demand for 2.5-inch hard drives has grown from approximately 16% of the overall
hard drive market in calendar 2003 to 34% of the overall hard drive market in calendar 2007, driven principally by the
fast-growing market for notebook computers.
These factors and our product expansion strategy have gradually increased our percentage of revenue derived from
non-desktop sources. In 2008, 56% of our revenue was from non-desktop sources compared to 43% in 2007.
For an additional discussion of risks relating to the hard drive industry, please see Item 1A of this Annual Report on
Form 10-K.
Desktop PC Market
The desktop PC market consists of the overall hard drive market for desktop computers. Individuals use desktop
computers in homes, businesses and multi-user networks. Desktop computers use software applications for word processing,
spreadsheet, desktop publishing, database management, multimedia, entertainment and for other needs. Hard drives store
desktop computer operating system and application software, as well as the data used by the applications.
We believe that the demand for hard drives in the desktop PC market has grown in part due to:
• the overall growth of desktop computer sales;
• the increasing needs of businesses and individuals for increased storage capacity on their desktop computers;
• the continuing development of software applications to manage multimedia content; and
• the increasing use of broadband Internet, including content downloaded from the Internet onto desktop
computer hard drives.
We believe several other factors affect the rate of desktop computer unit growth, including maturing desktop PC
markets in North America and Western Europe, an increase in first-time buyers of desktop computers in Asia, Eastern
Europe and Latin America, and the lengthening of desktop computer replacement cycles.
Mobile PC Market
The mobile PC market consists primarily of notebook computers. Individuals use notebook computers both in and
away from homes and businesses. Like desktop computers, notebook computers use software applications for various
needs and hard drives store notebook operating system and application software, and the data used by the applications.
We believe that the demand for hard drives in the mobile PC market has grown in part due to:
• the overall growth of notebook sales, including increased transition from desktop computers to notebook
computers;
• the increased mobility of the workforce;
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