Western Digital 2010 Annual Report Download - page 13

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There is a trend towards centralization of information storage and delivery of Internet-based services through cloud
computing. Cloud computing delivers shared resources, software and information to users on demand on a multitude of
devices, such as client PCs and handheld computing devices. Most cloud computing models consist of services delivered
through common data centers that utilize servers and hard drives designed for the enterprise market. The infrastructure
to support cloud computing storage needs is driving the demand for both SAS and SATA enterprise-class hard drives.
Consumer Electronics Market
The use of hard drives in CE products has been a major growth area in recent years. Currently, the two largest
segments of this market are:
• video content in applications such as DVRs; and
• hard drives in game consoles.
DVRs are available for use in home entertainment systems and offer enhanced capabilities such as pausing live
television, simplifying the process of recording and cataloging recorded television programs and quickly forwarding or
returning to any section of a recorded television program. Additionally, digital video disk (“DVD”) recorders increasingly
incorporate hard drives to allow for DVR functionality and faster recording of content onto removable DVDs. The
market for these products favors larger capacity hard drives and continues to grow globally. We believe growth in this
market will continue to build demand for higher capacity hard drives.
Game consoles are increasingly incorporating hard drives to improve the user experience. Hard drive technology
enables users to save games, movies, music, pictures and other user generated content.
The proliferation in the CE market of more sophisticated mobile devices, including smartphones, portable media
players and tablet computers, is driving the delivery of diverse content from hard drive intensive hosts. We believe this is
one of the factors influencing increased sales of enterprise-class SATA drives. We also believe that multimedia handheld
devices, such as video cameras and high-resolution still cameras, are enabling consumer production of expansive digital
content that requires increasing amounts of small form-factor hard drive storage, as well as high-capacity desktop-class
hard drives for editing, manipulation and long-term storage of such content.
External Hard Drive Market
Most new PC systems include high-speed external interfaces, such as USB 2.0, USB 3.0, external SATA, FireWire
TM
or Ethernet network connections, that permit users to supplement the storage space of their PC systems or home and
small office networks with the use of external hard drives. Users store additional programs or multimedia content, and
back up internal hard drives with external hard drives, as well as use mobile external hard drives for portability and
security. External storage can often be the easiest, quickest or only way of adding additional storage capacity to either a
desktop or notebook computer. We believe there is an increasing consumer awareness of the need and value of securely
storing personal digital content through backup applications and devices. We believe there is a growing need for external
storage as a way of expanding storage capacity in CE devices such as DVRs. We also believe there is a growing need for
media players that enable consumers to play digital movies and music, view photos, and access the Internet, otherwise
limited to being viewed on computer screens, from USB mass storage devices on their television or home theater system.
Solid-State Drive Market
The solid-state drive market consists primarily of solid-state drives which use semiconductor, non-volatile media
that retains data even when power is not applied using either single-level cell or multilevel cell NAND media.
We believe that the demand for solid-state drives in certain markets has grown in part due to:
• the increasing performance, measured by input/output per second, in enterprise applications;
• the increasing premium performance applications in the desktop and notebook markets; and
• the increasing requirements of the embedded systems market for high durability and long life cycles.
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