executive summit istanbul 2013...increasing sophistication of video and digital cameras new forms of...

© 2013 WESTERN DIGITAL TECHNOLOGIES, INC. ALL RIGHTS RESERVED.

Executive Summit Istanbul 2013

Rich Rutledge Sr. Vice President & GM Datacenter

June 2013

William Cain Vice President Technology

© 2013 WESTERN DIGITAL TECHNOLOGIES, INC. ALL RIGHTS RESERVED. 2

Changing Markets and Technology Innovation AGENDA

Rich Rutledge Sr. Vice President & GM Datacenter


Secular byte demand growth drives storage opportunity

Strong WD model enables market aligned investment

Client devices focused on increased mobility value

Datacenters the core of Private, Public, and Personal Cloud

Not all storage is created equal - storage basics and areal density

Client Innovation – hybrid storage

Datacenter Innovation – tiered storage

Connected Life Innovation – personal cloud


Forward-Looking Statements SAFE HARBOR

These presentations contain forward-looking statements within the meaning of the Private Securities Litigation Reform

Act of 1995, including statements concerning growth opportunities in the storage industry, including growth in units

shipped, areal density and content stored, and WD’s position within the industry. These forward-looking statements are

based on management’s current expectations and are subject to risks and uncertainties that could cause actual results

to differ materially from those expressed or implied in the forward-looking statements, including the impact of continued

uncertainty and volatility in global economic conditions; supply and demand conditions in the hard drive industry;

uncertainties concerning the availability and cost of commodity materials and specialized product components; actions

by competitors; unexpected advances in competing technologies; uncertainties related to the development and

introduction of products based on new technologies and expansion into new data storage markets; business conditions

and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; and compliance

with regulatory conditions imposed on us by the Chinese Ministry of Commerce. More information about the other risks

and uncertainties that could affect our business are listed in our filings with the Securities and Exchange Commission

(the “SEC”) and available on the SEC’s website at www.sec.gov, including our Quarterly Report on Form 10-Q filed

with the SEC on May 3, 2013, to which your attention is directed.

In addition, our long-term financial goals included in this presentation are based upon a variety of estimates and

assumptions which may not be realized and, in addition to the risks identified above, are inherently subject to

business, economic, competitive, industry, regulatory, market and financial uncertainties, many of which are beyond

our control. There can be no assurance that the assumptions made in preparing our long-term financial goals will prove

accurate or will be achieved. The assumptions our management used as a basis for the long-term financial goals are

not facts and should not be relied upon as being necessarily indicative of future results, and investors are cautioned

not to place undue reliance on the these long-term financial goals.

The forward-looking statements, including the long-term financial goals included in this presentation, speak only as of

the date hereof. We do not intend, and we undertake no duty, to update these forward-looking statements to reflect

subsequent events or circumstances; however, we may update our business outlook or long-term financial goals or

any portion thereof at any time in our discretion.


Empower People to Create, Manage, Experience and Preserve Digital Content

VISION


Storage Demand Drivers MARKETS

Developed

Developing

Homes People GDP

Devices Networks Datacenters 0.5B

1.3B

1.2B

5.8B

$45T

$25T

218 EB* 369 EB* 333 EB*

Mark

ets

Source: Western Digital Analysis

* CY11 Exabytes


Growth of the Digital Universe UNRELENTING STORAGE NEED

The amount of data created, replicated, and

consumed in a single year is growing at an annual

rate of

Driven by…

Proliferation of mobile devices and social media

Unstructured data – digital images, video, and

messaging

Increasing sophistication of video and digital cameras

New forms of data (e.g., recorded voice, location

information, sensor data)

Increasing use of surveillance video

46%

The total amount of data generated in the year 2020 is

expected to be on the order of 40,000 exabytes

(1 exabyte = 1 billion gigabytes)

Source: Digital Universe Study, EMC/IDC December 2012


-

1,000

2,000

3,000

4,000

5,000

6,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Enterprise System

Client

Personal Storage

Consumer Electronics

Phones & Tablets

Large and Growing Market: 34% CAGR through 2020 UNABATED DATA GROWTH

Over 75% of Exabytes in 2020 will be stored on HDDs

Source: Western Digital analysis

34% EB CAGR

from 2013-2020

Exa

byte

s


Thin and Light Systems

More Mobility

Datacenters

Storage Efficiency

Connected Life

Powerful Platform to Capture Emerging Opportunities

THE NEXT 10 YEARS

Emerging

Opportunities

2010-2019


New Opportunities in Storage EMERGING SOLUTIONS

Evolve Storage into Platforms, Solutions and Infrastructure

Thin and Light PCs and Mobile Devices restrict internal storage options

Pain Points Opportunities The Future Market

Segments

Cloud growth and scale drives reliability, capacity, performance and power requirements

Consumers want access to “anything, anytime, anywhere”

Thin HDD and Solid State Hybrid Drives

High-capacity HDDs, Cloud Optimized HDD, Cold Storage and PCIe SSD

“Home Datacenter” with Edge Devices, Gaming/DVR and Consumption Devices

Internet


Strategic Direction POWERING THE FUTURE

People

Platform

Technology

Financial Engine

Continue leadership momentum

Innovate and make markets

within key segments

Relentlessly drive operational

and financial efficiency

Strategically allocate capital

Grow beyond HDDs


Current Computing Market is Very Chaotic

100000

10000

1000

100

10

1

NeXT

TRS-80

Other

Atari

400/800

Atari ST Apple II

Amiga

Symbian

Commodore 64

RIM

iPod

Touch

Macintosh

Android

Tablet

Other

Smart-

phones

Windows

Mobile

Bada

RIM iPad

iPhone

Android

Phones

PC Units Shipped Per Year

(Log Scale)

RIM

Tablets

1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011

You

are

here


Historical State - Device Based Replication STORAGE LANDSCAPE IS CHANGING – INDEPENDENT DEVICES

All devices capable of

primary storage

Access to data / content is limited

Users take all data with them

Content is replicated on

multiple devices, no one device

contains all

Device 1

Device 2 Device 3


Future State – Datacenter Based Replication STORAGE LANDSCAPE IS CHANGING – INTERCONNECTED DEVICES

Mobile devices utilize storage as

a replicated subset of data

use

Subset temporarily holds

newly created content

User content is consolidated

Simplicity to synchronize,

store, protect and connect is key to

success

Device 2

Device 1

Device 3

Private Cloud

Public Cloud

Personal Cloud


iPad Mini / Android Aid the PC HIGH INCOME MARKET TREND

7” iPad / Android Devices and so call “phablets” (phones with large screens)

move away from replacing the PC


10–15mm 15–20mm 20mm

Trends MOBILE DEVICES

5.0mm NGFF SSD 7.0mm 7.0mm mSATA SSD 9.5mm 9.5mm Optical


HDD is Key to Thin Notebook Differentiation NB MARKET IS FLAT, BUT THIN PC’S ARE GROWING

Forecasting increasing

share with HDD…

…volumes with HDD

growing more rapidly than

SSD Only

… Ultrathin could become

30% of the NB HDD TAM

by the end of 2014


Hybrid Delivers Market Proven Value MOBILE DEVICES

“Some of them are using these ultra low-profile very high capacity drives, which

are now becoming available, which gives you the capacity and the thinness at the

same time, which I think it’s a nice way to hit lower price points.”

Paul Otellini

Intel ex President and ex CEO (July 2012)

Other

Misc

Responsive

Full SSD Thin

Machined Aluminum

Other

Misc +

Vol

Responsive

Cache + HDD

Thin

Stamped

Aluminum

Thin

Innovative

Composite

Before

After

$ Increase From Standard Notebook

Source: Intel used for permission


DataCenters Exist at Various Levels SECULAR DATA GROWTH DRIVES MULTIPLE DATACENTERS

Datacenters Are At the Core of All Clouds

© 2013 WESTERN DIGITAL TECHNOLOGIES, INC. ALL RIGHTS RESERVED. 20 20

Changing Markets Drive Innovation in Storage INNOVATION IN DATACENTERS

Cloud Datacenters

RAID & replication used to deliver same level of high

availability

Emerging architectures seek tradeoffs on

performance and reliability to attain capacity at lower

cost

Network-Attached Storage (NAS)

Technology and value-add capabilities are scaling

with organization size

SMB and Large Business NAS are in need for

Enterprise drives that have varying workload

attributes

Surveillance

Fast growing market with similar infrastructure as

NAS

Varying workloads driven by HD, camera count,

environmental requirements

WD CONFIDENTIAL


RAID vs. Replication – Driving Different Storage Device Needs INNOVATION IN DATACENTERS: CLOUD STORAGE

RAID 5

RAID 6

Required for RAID Acceptable for Replication

High Performance

High Reliability

Data

Replication

Lower Performance

Lower Reliability

Datacenter 1 Datacenter 2

Cluster 1 Cluster 1 Cluster 2 Cluster 2

Both Require Multi-Bay Capable Enterprise Class Storage


Expanding Network-Attached Storage Offerings INNOVATION IN DATACENTERS: NAS

Scale-out NAS architectures add auto-provisioning, workload balancing

Automated backup through Network Data Management Protocol (NDMP)

Remote-access capabilities

NAS tuned for specific workloads (random access, streaming)

WD CONFIDENTIAL


≤ 7,200 RPM HDD

Tape

RAID-ready 7.2K RPM HDD

Replication-ready 7.2K RPM HDD

15,000 RPM HDD

10,000 RPM HDD

DRAM

SLC SSD

MLC SSD

Datacenter Storage Tiers INNOVATION AT THE STORAGE DEVICE LEVEL

Tier 2

Tier 3

Tier 1

Tier 0

Higher Capacity

Traditional Nearline

Scale-Out

Cold Online

Tape

Aligning to application

performance,

capacity,

reliability,

workload,

and cost needs


WD Datacenter Storage Portfolio ELEMENTAL STORAGE BUILDING BLOCKS FOR EVERY DATACENTER

WD Xe Datacenter Performance HDD

High-density performance storage

for demanding applications

WD Re Datacenter Capacity HDD

Durable capacity storage

for high-availability deployments

WD Se Datacenter Capacity HDD

Optimal storage for NAS and

scale-out architectures


Empower People to Create, Manage, Experience and Preserve Their Digital Content

BRANDED VISION

Consumer Experience SMB Experience


Personal Cloud OWNING THE CATEGORY

Public Private

Personal

We are in the best position to

capitalize together

Consumers want Cloud

functionality, but don’t like

Corporate Cloud options

Less than 30% expressed interest

in Corporate Cloud Services

Major barriers to adoption

Leverage new Cloud behaviors,

but drive them to a more personal

destination

Source: R&R Partners, Segmentation Study, Feb 2013


En

ab

lers

W

D P

ers

on

al C

lou

d

Develop Ecosystem Through Powerful Enablers BRANDED GROWTH INITIATIVES

Content Generation Content Experience Content Management

Networking Premium Content

Entertainment

SCSA


Enable Small & Mid-size Business to Implement Consolidated IT Storage Solutions

SMB VISION

Unified/Simple

Scalable

Supported

Affordable

High Performance

Scalable

Supported

Bulletproof

SMALL BUSINESS MID-SIZED BUSINESS


Technology Innovation


June 2013


Source: John Squires – Founder and VP Engineering of Conner Peripherals

The Storage Hierarchy of Needs CUSTOMER PRIORITIES

Weight

Noise

Robustness

Power

Physical Size

Performance

Price

Capacity

Reliability

Availability


Performance vs. Cost – 15 years ago STORAGE TIERING

1.00E-08

1.00E-06

1.00E-04

1.00E-02

1.00E+00

1 10 100 1,000 10,000

Re

lati

ve

Pe

rfo

rma

nc

e

Relative Capacity / $

SRAM

memory

storage

100x

10x



Performance vs. Cost – Today STORAGE TIERING

1.00E-08

1.00E-06

1.00E-04

1.00E-02

1.00E+00

1 10 100 1,000 10,000

Re

lati

ve

Pe

rfo

rma

nc

e


SRAM

100x

10x

Performance

Gap

Tape & HDD performance did not scale as fast as

processor advancements



Performance vs. Cost – Today STORAGE TIERING

1.00E-08

1.00E-06

1.00E-04

1.00E-02

1.00E+00

1 10 100 1,000 10,000

Re

lati

ve

Pe

rfo

rma

nc

e


SRAM

Tape & HDD performance did not scale as fast as

processor advancements

NAND Flash provides 100x performance for

random R/W operations

Performance

Gap



Storage Technology Basics HDDs AND SSDs

Recording Head

Electron in

the magnetic

media

Silicon

HDD uses spin of the electron Flash uses charge of the electron

Floating Gate

V+

Electrode

Gate Oxide

V+

Air gap e-

e-


HDD SSD

Inherent Cost/Performance Differences HDDs AND SSDs

Capacity = Surface Area × Density

HDD: Low $/GB through “mechanical advantage”

NAND Flash: High performance through parallelism

Price per GB in HDD ~ $0.08

200mm Slider Wafer

Replicated over surface

of unfeatured disk by

mechanical motion

Diameter

2.5” or 3.5”

= 80,000 Sliders

= 40,000 Terabytes

Head Gimbal

Assembly (HGA)

300mm NAND Wafer

No mechanical motion required and

parallelized for higher throughput

Price per GB in SSD ~ $0.80

= 250 NAND Die

= 2 Terabytes

HOST


Delivering Solutions STORAGE TIERING

Capacity


Enterprise Density Growth Rates AREAL DENSITY GROWTH

Enterprise HDD MLC NAND SLC NAND Tape


1999 2002 2005 2008 2011 2014

HDD and NAND flash have been growing at the same rate for the past 10+ years

Tape growth has been slower


100

1000

10000

2010 2012 2014 2016 2018 2020

Are

al D

en

sity (

Mb

/mm

2)

Parallel Growth Rates AREAL DENSITY GROWTH

Conventional

PMR

Conventional

FG NAND

HAMR

Shingle/

PMR

HAMR/BPM/

TDMR

Dual FG

3D

RRAM X-point Array Extension

Invention

Existing HDD

19 nm to

1Y CAGR

is ~21%1

1SanDisk Investor Day 2013


Zooming In on the Bit HDD AREAL DENSITY

Extreme Close-up of Data Bits

Bit Aspect Ratio (BAR) =

Track Width Bit Length

Scaling Dimensions: Linear Density – Bits Per Inch (~1 dB/8% increase)

Track Density – Tracks Per Inch (~1 dB/24% increase)

Head Media Spacing – Fly Height (~1 dB/nm)

© 2013 WESTERN DIGITAL TECHNOLOGIES, INC. ALL RIGHTS RESERVED. 40 WD Confidential

Heat Assisted Magnetic Recording (HAMR) AREAL DENSITY INNOVATION

Next major technology for AD extendibility with

minimal system impacts.

To record on this type of media we must first

heat the media until it becomes writeable with

conventional recording fields

Laser


Leading Edge Optical Technology NEAR FIELD OPTICAL TRANSDUCERS REQUIRED FOR HAMR

Pole

Waveguide

NFT

Optical spot ~ 50 nm on media

Written track width defined by thermal spot

Waveguide transmits light to NFT near ABS

NFT design creates “surface plasmons” that

produce a focused spot smaller than the

wavelength of light

Optical spot < 50 nm for 1Tb/in2

Less than 1/10 the size of a BluRay disc spot!

NFT Designs1 1A Study of Near Field Transducer Performance, Electromagnetics in Advanced Applications (ICEAA),

2012 International Conference on 2012


Mobility Drives Innovation HDD INNOVATION

Computing

Multitasking Apps

Email, Music & Video

Raw Flash

Compatibility

AFM 3.0

Usage based

Adaptive Flash

ManagementTM

Technology

AFM 2.0

Application

Awareness AFM 1.0

Performance

Leadership

iNANDTM

EFD “Classic”

2013 Investor Day | May 8, 2013


Balancing Endurance vs. Cost SSD INNOVATION

For datacenter applications, NAND flash write endurance is an issue Multiple product configurations are needed to optimize $/GB for anticipated

write workload

Over provisioning

controller technology

Read intensive applications

media streaming, Web server, boot

Mixed read/write applications

database/OLTP, data warehousing

Highest performance

cache, logging, HF trading

Very low number of write cycles – not applicable to compute applications,

primarily used for consumer electronic devices

MLC

eMLC

SLC

TLC


High Capacity for the DataCenter HDD INNOVATION

Mechanical Design Bigger diameter platter

More platters

Slower RPM


High Capacity for the DataCenter HDD INNOVATION

Mechanical Design Bigger diameter platter

More platters

Slower RPM

Maintain design robustness Quality


Device Design Point Datacenter Design Point

Metric / Segment Device Datacenter Note

Linear Density (BPI) Lower Higher Sequential Performance

Radial Density (TPI) Higher Lower Capacity & Reliability

Offline Repair Regularly Rarely Performance

Annual Usage Low High Workload (TB /Year)

Capacity / Platter 1000 GB 800 GB +25%

TP

I

BPI

TP

I

BPI

Innovation

Optimizing the Drive to the Application

Higher Capacity Through Format Optimization HDD INNOVATION


SMR: Even More Capacity Through Format Change

HDD INNOVATION

Conventional format Super-density format

Conventional format: data track separation.

Re-writable without affecting surrounding data (any car can be moved any time)

Shingled format (super-density): overlapped data tracks

Re-write requires significant manipulation to maintain surrounding data (moving some

cars requires several other cars to be rearranged)


WD Datacenter HDDs Deliver Unique Value THE RIGHT DRIVES FOR THE JOB

0 100

Cost

Workload

Performance

Reliability

0 100

Performance

Workload

Capacity

Desktop HDD

0 100

Performance

Capacity

Reliability

Workload

0 100

Capacity

Reliability

Cost

Workload

Performance

Purchase Criteria Priority

Capacity

Cost

Cost

Reliability

Choosing the Right Drive Delivers the Lowest TCO

WD CONFIDENTIAL


Future Opportunities STORAGE TIERING

1.00E-08

1.00E-06

1.00E-04

1.00E-02

1.00E+00

1 10 100 1,000 10,000

Re

lati

ve

Pe

rfo

rma

nc

e


SRAM

SSD Opportunity

Cold Storage

Opportunity

PCIe

Hybrid

Future Nonvolatile

Cache Options

PCM MRAM

PCM = Phase Change Memory

MRAM = Magnetic Random Access Memory

IOPS moving to Silicon

PetaBytes Moving to HDD


Evolving Requirements for Mobility CLIENT STORAGE OPPORTUNITIES

9.5mm 5mm

Source: Intel and Western Digital Analysis


Get Thinner! Get Faster! MOBILITY APPROACH

Innovative Design | 50% Smaller | Strong Market Acceptance

Standard 9.5mm Slim 7mm Ultra-Slim 5mm


Get Thinner! Get Faster! MOBILITY APPROACH


Reimagining the Mobile Hard Drive HDD INNOVATION (5 mm)

Full-height aluminum base

enclosure for high structural

rigidity and low mass

Fixed-shaft motor for robust

drop, vibration and pinch

performance

Dual Stage Actuation (DSA)

ensures performance

under vibration

0

5

10

15

9.5mm 2.5" 7 mm 2.5" 5 mm 2.5" 5 mm 1.8"

GB

/cc

1 Disk HDD Volume Efficiency


Miniaturized host

interface connector:

70% smaller

Compact electronics leverage latest

packaging technology for robust

shock performance


Research, consultation and collaboration: Helping solve customer system architecture challenges

Taking an active role in defining the next phase of storage architecture evolution

Moving up the stack creates value and differentiation

Value-add Through Software FROM DEVICE TO SOLUTION

Future Past Present

File Systems Applications

IO Managers & Filters

Volumes & Partitions

Disk Class & Filters

Hard Disk

HW Drivers



Disk ASIC

Hard Disk

HW Drivers





Hard Disk

HW Drivers

Disk ASIC


Disk ASIC



Trends Enabling the Personal Cloud OPPORTUNITY

Data increases 38%

Bandwidth only 15%

Connected devices per home:

2002= 1

2012 = 10

+ =

By 2016, we expect an average household to have 2.8 terabytes (TB) of new digital content

needing some form of storage, representing a seven-fold growth between 2011 and 2016 Source: Gartner

Multiple devices access

content from personal cloud

G7 Countries

Canada

France

Germany

Italy

Japan

United Kingdom

United States

Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1

12,500

10,000

7,500

5,000

2,500

Average Connection Speed K

bp

s

Source: Akamai

0

07 08 08 09 09 10 10 11 11 12


Trends Enabling the Personal Cloud OPPORTUNITY

Wired/WiFi

High Speed

Free

3G 4G 5G

Lower Speed

Higher Cost

Wired Internet

Moderate Speed

Low Cost

WD TV Live Hub Media Center

• Centralize your media

• Stream movies, shows, music

• Full-HD 1080P

WD Apps

• WD Photos

• WD 2go

• WD Backup

My Book Live Duo Personal Cloud Storage

• View your content anywhere

• Upload files on the go

• Double-safe place for all your

media and files

My Net AC1300 HD Dual-Band Routers

• Up to 450+ 1300 Mbps

• HD media streaming

• AC + FasTrack™ Technology


Secure Content Storage Association (SCSA) INNOVATION TO STORE PROTECTED CONTENT ON HDD

WB, Fox, WD, and SanDisk founders

Enable secure digital purchase and download of Highest Quality (full 1080p

and 4K) digital copies of first-release and early window titles

Industry-wide Standard; Compatible with Ultra-Violet and other eco-systems

Movies are stored in encrypted format on consumer’s storage device

Decryption performed by CPUs on storage and playback devices

Consumers can transfer a purchased title to other devices or take it with them

on a mobile device

CE companies to market connected TVs, laptops, Blu-ray™ players, tablets,

mobile phones and gaming consoles that play SCSA-format titles


Innovating

Expanding portfolio

Hardware and software

Change Creates Opportunities

No single technology meets all needs

Requires tiered solutions

Storage Ecosystem Evolution

Innovating to Capture Opportunities KEY MESSAGES

Client – Thin and Fast drives mobility

DataCenter – Optimizing storage to the application drives growth

Digital Life – Personal Cloud enables fast, secure content sharing

Innovation Critical to Success


Thank you

Rich Rutledge Sr. Vice President Enterprise

June 2013


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