Businessmodel of Western Digital

Customer Segments

Western Digital provides a range of data storage devices and solutions to a diverse network of customers around the world. The Company’s customers can be organised broadly into the following categories by product and service line:

• General Consumers, comprising users of various computing platforms to which the Company provides consumer data storage products such as hard drives and USB flash drives;
• Commercial Entities, including medium and large commercial businesses to which the Company provides enterprise-level data storage solutions and services;
• Data Server Operators, including various large commercial enterprises, such as internet and social media infrastructure businesses, to which the Company provides data centre solutions and support; and
• Original Equipment Manufacturers, including manufacturers of electronic devices, Personal Computer and Mac manufacturers, major server original equipment manufacturers, storage subsystem suppliers, to which the Company provides storage devices and solutions. Western Digital’s largest single market is its native US, which accounted in 2016 for more than 25% of the Company’s total revenue. This was followed by China, with the Company also doing significant business across the rest of Asia, as well as in Europe, the Middle East, and Africa.

Value Propositions

Western Digital provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company established as one of the leading data storage device manufacturers in the world, controlling high-profile brands such as Sandisk and Western Digital brands and serving a range of high-profile original equipment manufacturers and commercial enterprises;
• Its broad portfolio of products and solutions, with the Company providing a range of physical data storage devices, as well as more complex data storage and data centre solutions, tailored to the needs of a diverse customer base;
• Its portfolio of proprietary technologies, with the Company dedicating significant funds to the development of innovative technologies and products that set the Company’s offerings apart from those of its competitors;
• Its accessibility, with the Company reaching its customers through multiple channels, including digital and physical channels, as well as various third-party operators; and
• Its international sales reach, with the Company serving a large customer base in its native US, as well as an extensive network of customers across Asia, Europe, the Middle East, Africa, and Latin America. ### Channels

Western Digital operates a website at www.wdc.com, through which it provides information on its various products, solutions, and target industries. While the Company does not operate its own online sales channel, it does provide customers with information on retailers and resellers that sell its various products. The Company also operates a consumer-focused cloud storage service www.mycloud.com, which allows customers to store and access personal files such as photos and documents online.

Western Digital also operates its own in-house direct sales force which deals with clients out of the Company’s network of dedicated sales offices located in major business hubs across the Americas, Asia Pacific, Europe and the Middle East. These sales personnel are organised by geographic region and operating segment, providing a more focused sales approach.

Western Digital reaches customers and end-users through various third-party channels. The Company notably sells products through a network of authorized distributors and resellers that work to extend the Company’s reach, particularly in foreign jurisdictions. Its products are also sold via various digital and physical electronics sales outlets, and are bundled into third-party products produced by a range of original equipment manufacturers.

Western Digital operates its own manufacturing and distribution infrastructure. This includes facilities across the Americas, Asia Pacific, and the Middle East, that enable the Company to serve its international client base quickly and efficiently.

Customer Relationships

Western Digital provides a range of services to customers on a self-service basis. This includes its website which provides a tool through which customers can find sellers of the Company’s various products, as well as its cloud storage platform, which enables customers to store files and documents online without interacting with members of the Company’s sales and service personnel.

Western Digital provides a more personalised service through its direct sales force, in particular in relation to its data centre and commercial storage solutions, which require that its consults directly with customers in order to provide a solution tailored to their individual circumstances. The Company seeks to establish long-standing relationships with its commercial customers, while its relationships with original equipment manufacturers often depend on the lifecycle of individual products.

Western Digital provides ongoing support to its customers, with large clients afforded their account management teams. The Company’s dedicated support personnel can also be contacted online or over the phone. The Company also operates a community forum where users can share problem, fixes, and advice, as well as a dedicated support portal that includes FAQs, guides, and tutorials.

Western Digital additionally interacts directly with customers and provides updates on its corporate activities through its social media accounts, including with Facebook, Twitter, and YouTube.

Key Activities

Western Digital is a developer, manufacturer and provider of data storage devices and data centre solutions, serving a broad network of clients across the information technology industry. It also serves commercial entities across multiple sectors, helping to support and develop their technology infrastructure and data management systems.

The Company’s products and services are organise into three principal lines of business: Datacenter Devices and Solutions, comprising the development and sale of capacity and performance enterprise hard disk drives, enterprise solid state drives, datacenter software, and system solutions; Client Devices, comprising products for various devices, including mobile, desktop, gaming and digital video hard drives, client solid state drives, embedded products, and wafers; and Client Solutions, comprising the Company’s removable products, hard drive content solutions, and flash content solutions.

Key Partners

Western Digital works closely with a network of partner companies and organisations across its multiple operating segments. These partners can be categorised broadly as:

• Supplier and Vendor Partners, including suppliers of raw materials, equipment, and tools that are used across the Company’s manufacturing processes, as well as providers of technologies and services that are utilised more broadly across the enterprise;
• Channel and Distribution Partners, including the Company’ network of resellers, distributors, and retail partners that help to extend the Company’s marketing and sales reach, particularly in foreign jurisdictions;
• Rewards Partners, comprising a range of managed service providers, value added resellers, and system integrators that work with the Company in return for various rewards and benefits; and
• Strategic and Alliance Partners, comprising market leading companies from various industries, with which the Company works on a range of marketing, branding and other joint projects. Western Digital has launched a number of partnerships in recent years. This includes a distribution partnership with SED International Holdings, a development partnership with Intel, and a tie-up with COP Security.

Key Resources

Western Digital’s key resources are its intellectual properties and technologies, its raw materials and supply chain, its manufacturing and distribution facilities, its IT and communications infrastructure, its sales channels, its partnerships, and its personnel.

Western Digital owns more than 13,500 active patents which it utilises in the development and manufacture of its products and solutions. Searches of records published by the US Patent and Trademark Office identified numerous patent applications filed in Western Digital’s name, including applications entitled ‘Hard disk drive enclosure base with a helium sealed gasket’, ‘Shingle magnetic writer having a low sidewall angle pole’ and ‘Magnetic reader having a crystal decoupling structure’.

Western Digital also owns a number of key physical properties, notably its extensive network of manufacturing facilities spread across the US, Asia Pacific, and the Middle East.

Cost Structure

Western Digital incurs costs in relation to the development of its technologies, the procurement of raw materials and supplies, the operation of its manufacturing and distribution facilities, the implementation of marketing and advertising campaigns, the maintenance of its It and communications infrastructure, the management of its partnerships, and the retention of its personnel.

For the year ending 1st July 2016 Western Digital recorded cost of revenue in the amount of $9.56 billion, research and development costs totalling $1.63 billion, and selling, general and administrative costs totalling $997 million.

Revenue Streams

Western Digital generates revenue through the sale of data storage products and the provision of data centre solutions. The Company’s revenue is divided into three principal revenue streams:

• Datacenter Devices and Solutions, comprising revenue derived from the sale of performance enterprise hard disk drives, enterprise solid state drives, data centre software, and system solutions;
• Client Devices, comprising revenue derived from the sale of products used in various third party devices, such as mobile, desktop, gaming and digital video hard drives; and
• Client Solutions, including revenue derived from the sale of removable products, hard drive content solutions, and flash content solutions. The Company also derives revenue in the form of license and royalty revenue related to its intellectual properties.

For the year ending 1st July 2016 Western Digital generated net revenue for the year of $12.99 billion, down on the 14.57 recorded by the Company the previous year.