We are the worldwide leader in the design, manufacturing and marketing of hard disk drives. Hard drives are used as the primary medium for storing electronic information in systems ranging from desktop computers and consumer electronics to data centers delivering information over corporate networks and the Internet. We produce a broad range of hard drive products that make us the leader in the enterprise, desktop and consumer electronics markets.

We have achieved our leadership position through ownership of critical component technologies, a commitment to advanced research and development and a focus on manufacturing and supply chain efficiency and flexibility. We believe our current industry leadership in technology and manufacturing efficiency has been achieved through the successful ongoing execution of our long-term strategic plan developed in 1998. This long-term plan involves:

• increasing our commitment to investment in fundamental research and technological innovation;
• introducing a disciplined methodology for commercializing our technological innovations in an effort to consistently be first to market with new products;
• instituting common technology platforms throughout our product portfolio to allow us to efficiently leverage our component technology advancements across multiple products;
• streamlining our operations by rationalizing our manufacturing processes to eliminate redundant facilities, focusing on strategic competencies and enhancing our supply chain management;
• increasing the automation and uniformity of our manufacturing processes through our "Factory of the Future" initiative; and
• implementing the Six Sigma quality management philosophy company wide.

We believe that our business strategy will allow us to continue to gain market share, extend our industry leadership and improve our financial performance.

Our industry requires significant investments in technology. We believe our industry leading scale and product breadth enable us to commit more resources to research and development and capital investment than our competitors. In addition, our ownership of critical component technologies enables us to better control our product roadmap and provides us with a significant advantage over manufacturers who rely on merchant component suppliers for key elements of their technological innovation.

We sell our hard drives primarily to major original equipment manufacturers, or OEMs, with whom we have longstanding relationships. These customers include Dell, EMC, Hewlett-Packard, IBM and Sun Microsystems. We also have key relationships with major distributors, who sell our hard drive products to small OEMs, dealers, system integrators and retailers throughout most of the world.