1. Small Form Factor Consumer Electronics Storage Pat O’Malley Sr. Vice President Consumer Electronics

2. November 4, 2004 IDEMA Financial Conference Page 2 Small Form Factor Opportunities  Differences between the Compute and Consumer Electronics applications  Handheld Market for 1.0” and 1.8” hard disc drives  Mobile Phone Market – how big could it be and when?  NAND vs. HDD Cost Projections

3. November 4, 2004 IDEMA Financial Conference Page 3 Key Differences between Compute & CE  Market GrowthStable; MatureVolatile; Emerging  Product TransitionsSlow; StructuredHH - Faster; Seasonal DVR/Game - Slow  Product TypesFew; StandardMore; Diverse  Product Life Cycles2-3 yr. Upgrade cycle2-10 yrs. Upgrade cycle  “System” Price Points$499-$500,000$49-$499  Channel DependenciesDirect; 2 StepDirect; Retail; E-tail  Business ModelsIntegration sellIntegration sell Co-Market options Direct Branded Subsidy Compute CE

4. November 4, 2004 IDEMA Financial Conference Page 4 Handheld Market Handheld HDD TAM (1” and 1.8”) 0 5 10 15 20 25 30 CY02CY03CY04CY05CY06CY07 Units in Millions 1.0"1.8" 2003 – 2007 CAGR=74% Market Characteristics  Portable audio is dominant application driver through CY05  Image, PDA, video driving next wave of application demand  Significant number of players (20+) chasing portable audio today – not all will survive  Business models are suspect today as it appears few of the participants are making money on the hardware transaction  Handheld video acceptance still TBD – screen size, DRM, and battery life will influence growth rates  Without demand for video applications, capacity growth requirements could soften

5. November 4, 2004 IDEMA Financial Conference Page 5 Mobile Phones - HDD Total Available Market Estimate 10.0 20.0 30.0 40.0 50.0 60.0 2005200620072008 Units in Millions 0.1% 2.2% 4.0% 7.0 % HDD Attach Rate CY 2005 CY 2006 CY 2007 CY 2008

6. November 4, 2004 IDEMA Financial Conference Page 6 Mobile Phone Market by Geography/Make Replacement Rates: 26%38% 15% 44% 62% Global: 31% Source: IDC Dec, 2003 Source: Gartner March 2004 *Ken Takagi: Japan only volume, share estimated

7. November 4, 2004 IDEMA Financial Conference Page 7 HDD Storage vs. Flash OEM NAND Flash Data Point ~ $73/GB Market Factors  NAND flash pricing reductions combat HDD entrance  0.85” 3.3mm form factor high risk due to $/GB compared to flash  Need cell phone real estate to allow 0.85” 5mm form factor solutions