Western Digital 2015 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2015 Western Digital annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

PART I
Item 1. Business
General
We are a leading developer, manufacturer and provider of data storage solutions that enable consumers, busi-
nesses, governments and other organizations to create, manage, experience and preserve digital content. Our product
portfolio includes hard disk drives (“HDDs”), solid-state drives (“SSDs”), direct attached storage solutions, personal
cloud network attached storage solutions, and public and private cloud data center storage solutions. HDDs are our
principal products and are today’s primary storage medium for the vast majority of digital content, with the use of
solid-state storage products growing rapidly. Our products are marketed under the HGST, WD and G-Technology
brand names.
We believe we are well positioned to capitalize on important long-term growth trends in the rapidly changing
storage industry — the ongoing expansion in digital content and the growth in the amount of that content being
stored. These trends are linked directly to consumers’ and commercial enterprises’ increasingly ubiquitous experience
with data and the increasing value of that data. The confluence of data growth and the ability to expand the extraction
of value from data is driving the need for the long-term retention of as much data as possible for legal and regulatory
purposes and for potential future refinements in a wide range of fields, including advertising, aerospace, e-commerce,
energy, medical, mining, and security surveillance. We believe the ways in which people and organizations are creat-
ing and using data are changing and that the amount of data considered useful to store is expanding. Increasingly,
more and more digital content is being stored and managed on hard drives and solid state drives in the cloud
environment and we believe we are strongly positioned to continue to play a role in this transition.
With a focus on innovation and value creation, our goal is to grow through continued strong execution and with
targeted investments in datacenter infrastructure, mobility and the cloud.
Due to regulatory requirements, we have operated our global business since March 2012 through two
independent subsidiaries — HGST and WD, both long-time innovators in the storage industry. In March 2014, we
submitted an application to the Ministry of Commerce of the People’s Republic of China (“MOFCOM”) to lift the
condition it imposed on our Company to operate these businesses separately. At this time, we are awaiting MOF-
COM’s response to our application.
Our headquarters are located in Irvine, California. WDC was founded in 1970 as a specialized semiconductor
manufacturer and since entering the hard drive industry in 1988, its WD subsidiary has been a technology standard-
setter in the industry’s highest volume markets. HGST, a provider of high-value storage in enterprise markets, was
acquired by WDC in March 2012. HGST was founded in 2003 through the combination of the HDD businesses of
International Business Machines Corporation, the inventor of the HDD, and Hitachi, Ltd. (“Hitachi”). As of July 3,
2015, WDC had approximately 9,700 engineers and one of the industry’s largest patent portfolios with more than
7,000 active patents worldwide.
We have relationships with the full range of customers currently addressing storage opportunities. These include
storage subsystem suppliers, major server original equipment manufacturers (“OEMs”), Internet and social media
infrastructure players, and personal computer (“PC”) and Mac™ OEMs. We sell our products to OEMs, distributors,
resellers, cloud infrastructure players, and consumers. We have a strong consumer brand heritage with our WD and
G-Technology branded products businesses.
The storage market in which we operate is rapidly changing and evolving. To address these dynamics, we regu-
larly review opportunities to apply our knowledge of data storage technology to markets that we do not currently
serve or in markets where we seek to broaden our participation and augment our resources and capabilities. Invest-
ments and acquisitions are a key part of our overall strategy to create long-term value within the storage ecosystem.
For example, since the beginning of fiscal 2014 we have strengthened our enterprise SSD business with acquisitions of
companies such as Virident Systems, Inc. (“Virident”), sTec, Inc. (“sTec”) and VeloBit, Inc. (“VeloBit”). In March
2015, we acquired Amplidata, NV (“Amplidata”), a developer of object storage software for public and private cloud
data centers, a key building block in a new systems business we have entered called active archive storage that is
addressing a new greenfield opportunity in the object storage space. With this strategy, we are assembling the
4