Western Digital Corp.: Adaptability, Savvy Marketing Pay Off

March 14, 2007
Data storage pioneer stays ahead of trend and sees revenue results.

The first rule of any manufacturer should be, "Know thy market." This dictum applies not only to the market of today, but also knowing where the market is heading, and creating a product to greet them when they arrive.

As a technology hardware company, Lake Forest, Calif.-based Western Digital Corp. (WD) already enjoys a head start from being in a very forward-looking industry. Founded in 1970, WD, one of IndustryWeek's 50 Best Manufacturing Companies for 2006, provides digital information storage products and services for the enterprise and desktop market. With the explosion of multimedia in both the business and computer spheres, WD was well placed to ride the rising tide of data to increased profitability.

Additionally, WD crafted responsive products to fit the needs of current and potential customers, and has seen these efforts pay off with new markets, valuable business partners and consistent revenue growth.

For example, consider the genesis and evolution of WD's Raptor drive. The original WD Raptor was launched in March 2003 for the enterprise market. However, due to the lack of entry-level performance-oriented drives for the growing computer enthusiast market, the original Raptor drive began to gain traction among single users looking to wring top-notch performance out of their PC setups by adding capacity.

An ensuing upgrade of the Raptor produced one of the fastest single-user performance drives available. In a nod to the success of the drive in the computer enthusiast market, WD began to offer the drive at retail stores and even introduced a limited edition Raptor X that featured a crystalline polycarbonate-based transparent cover, which allows the user to actually see the drive at work.

In fact, the past year saw a refresh of WD's entire product line, resulting in new models in each market (desktop, consumer electronic, enterprise, mobile and branded products) and enabling the company to offer a product line that covers 90% of the available hard drive market.

Western Digital Corp.
At A Glance

Western Digital Corp.

Lake Forest, Calif.
Primary Industry: Computer and other electronic products
Number of Employees: 23,161
2005 In Review
Revenue: $3.6 billion
Profit Margin: 5.45%
Sales Turnover: 2.29
Inventory Turnover: 20.23
Revenue Growth: 19.43%
Return On Assets: 17.12%
Return On Equity: 40.69%

"We established revenue diversification as a strategic objective to address the growth of new applications for hard drives and fast-growing new market opportunities," states Chairman Matt Massengill, who recently retired from WD, but remains a member of the board.

An illustration of the payoff of this market-responsive strategy can be seen in the fact that revenue from consumer electronics and mobile drives was up to more than a third from 25% one year earlier.

New market growth for WD also occurred in a geographic sense, as revenues from fast-growing Asian markets rose for the first time to match those of the Americas (36% each).

According to second-quarter results, which were released Jan. 25, 42% of the quarter's revenue came from newer market sources. WD also reported strong year-over-year performance including 28% growth in revenue, 35% unit growth and 23% growth in net income.

"The second quarter results are linked directly to the significant investments in technology and global infrastructure that WD has made over the last several years, both in traditional computing markets and in the newer consumer electronics markets for hard drives," said John Coyne, president and CEO, in a recent statement. "We continue to reinvest the strong cash flows from our ongoing business into current and future opportunities for data storage. Combined with our focus on customers, quality, reliability and execution, we believe this approach will enable us to continue delivering steady and outstanding financial performance."

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About the Author

Brad Kenney | Chief Marketing Officer

Brad Kenney is the former Technology Editor of IndustryWeek and now serves as director of the mobile/social platforms practice at R/GA, a global marketing/advertising firm in New York City.

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