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Sales and Distribution
We maintain sales offices in selected parts of the world including the major geographies of the Americas, Asia
Pacific, Europe and the Middle East. Our international sales, which include sales to foreign subsidiaries of United
States ("U.S.") companies but do not include sales to U.S. subsidiaries of foreign companies, represented 78%, 81%
and 83% of our net revenue for 2013, 2012 and 2011, respectively. Sales to international customers are subject to
certain risks not normally encountered in domestic operations, including exposure to tariffs and various trade regu-
lations. For a discussion regarding the risks related to sales to international customers, see Item 1A of this Annual
Report on Form 10-K.
We perform our marketing and advertising functions internally and through outside firms utilizing both
consumer media and trade publications targeting various reseller and end-user categories. We also maintain customer
relationships through direct communication and providing information and support through our Web site. In accord-
ance with standard storage industry practice, we provide distributors and retailers with limited price protection and
programs under which we reimburse certain marketing expenditures. We also provide distributors, resellers and
OEMs with other sales incentive programs.
Original Equipment Manufacturers.
OEMs, including large-scale datacenter operators, purchase our products,
either directly or through a contract manufacturer such as an original design manufacturer ("ODM"), and assemble
them into the devices they build. OEMs typically seek to qualify two or more providers for each generation of prod-
ucts and generally will purchase products from those vendors for the life of that product. Many of our OEM customers
utilize just-in-time inventory management processes. As a result, for certain OEMs we maintain a base stock of fin-
ished goods inventory in facilities located near or adjacent to the OEM's operations.
Distributors.
We use a broad group of distributors to sell our products to non-direct customers such as small
computer and CE manufacturers, dealers, systems integrators, online retailers and other resellers. Distributors gen-
erally enter into non-exclusive agreements with us for the purchase and redistribution of our products in specific terri-
tories.
Retailers.
We sell our branded products directly to a select group of major retailers such as computer super-
stores, warehouse clubs, online retailers, and computer electronics stores, and authorize sales through distributors to
smaller retailers. The retail channel complements our other sales channels while helping to build brand awareness for
us and our products. We also sell our branded products through our Web sites.
For 2013 and 2011, no single customer accounted for 10% or more of our net revenue. For 2012, sales to Hew-
lett Packard Company accounted for 11% of our net revenue. For a discussion of risks related to our customers, refer to
Item 1A of this Annual Report on Form 10-K. For additional information regarding revenue recognition, sales by
geographic region and major customer information, see Part II, Item 8, Notes 1 and 6 in the Notes to Consolidated
Financial Statements, included in this Annual Report on Form 10-K.
Seasonality
We have historically experienced seasonal fluctuations in our business with higher levels of demand in the first
and second quarters of our fiscal year as a result of increased customer spending. Seasonality can also be impacted by
the growth in emerging markets and macroeconomic conditions. For a discussion of risks related to seasonality in our
business, see Item 1A of this Annual Report on Form 10-K.
Service and Warranty
We generally warrant our newly manufactured products against defects in materials and workmanship from one
to five years from the date of manufacture depending on the type of product. Our warranty obligation is generally
limited to repair or replacement. We have engaged third parties in various countries in multiple regions to provide
various levels of testing, processing or recertification of returned products for our customers. For a further discussion
of our service and warranty policy, see Part II, Item 8, Note 1 of the Notes to Consolidated Financial Statements
included in this Annual Report on Form 10-K.
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