Mr. Kuniyoshi Matsui
Recording Media Business Group
Thank you for attending this presentation today.
As was just explained, TDK has decided to transfer sales operations relating to TDK-brand recording media products to Imation Corp., but keep related development and manufacturing at TDK. I would like to explain our thinking behind this move.
Today's decision is a further step in our drive at TDK to prioritize resources on selected businesses and will lead to more efficient operations. In spring last year, we initiated a series of structural reforms, which included withdrawing from the manufacturing of CD-Rs and DVDs. As a result of these actions, the recording media products actually manufactured in-house by TDK at present comprise magnetic tapes for AV and data storage applications, Blu-ray discs and some accessories. There may be people who question whether it was the right decision to retain development and manufacturing activities in TDK. Let me explain.
TDK has been involved in the recording media business for more than 50 years. We believe that the core technologies we have accumulated over the years will allow us to continue creating various forms of value going forward. We decided that we could generate sufficient earnings even after the transfer of sales activities for TDK-brand products by focusing our resources on development and manufacturing and taking full advantage of our wealth of core technologies. This was the background to today's decision.
This slide shows specific examples of these core technologies that we will tap to advance our business going forward.
The core technologies that underpin magnetic tapes are without doubt our coating technologies. Technologies for a uniform and wide coating are key for manufacturing high-quality tapes in large volumes at low cost. In addition, ultra-thin-layer coating technology and surface processing technologies that use our materials technology and facilitate increased capacity, are valuable technologies for supporting progress in data storage tapes.
Equally, thin-film sputtering technologies, material technologies and high-precision molding technologies underpinning optical discs are essential technologies when one considers optical disc migration in the future.
These technologies will be the backbone of the recording media business moving forward-as well as the driving force for advancing this business.
As I explained earlier, the products that TDK will continue to develop and manufacture are data storage tapes and Blu-ray discs. These are products where TDK is leading the way and showcase TDK's strengths.
That being the case, I would like to talk a little more about them.
TDK's mainstay product in the field of data storage tapes is LTO-standard tapes. LTO stands for Linear Tape-Open.
The keys to success in this business are speedy development and being first to market by quickly launching products. Naturally, high reliability is important too.
TDK's trump cards in this regard are its integrated manufacturing system from development through mass production, which achieves short lead times, and its technical development capabilities, which are best illustrated by ultra-fine dispersion technologies for magnetic particles and ultra-thin double-layer coating technologies. The many technology assets we have built up in the OEM business to date will be vital to ensuring that we win in the face of competition in the future.
In addition to the next generation of LTO-standard products, TDK will target the DDS tape business for development. While fourth-generation products are just now hitting the market, there are already plans for the development of products with even higher areal density. We believe that we can quickly develop products with the various technologies, including materials technologies, I have just referred to.
Data tapes is a stable market. Within this market, demand for midrange tapes, particularly LTO-based products, is increasing. These products already account for 46% of the total data tape market, a share that is forecast to reach 56% by 2011.
This slide looks at demand for LTO-standard tapes only. For the time being, demand can be expected to expand along with frequent advances in generations. Accordingly, it is important to be first to market by quickly developing and launching products. TDK is determined to set the pace in the development of new generations, playing the role of a trusted tape media supplier for tape drive manufacturers.
Next, I will talk about our business strategy for Blu-ray discs.
TDK is the only media manufacturer on the Board of Directors of the Blu-ray Disc Association.
Backed by important intellectual property-which we own-we will conduct business in this field utilizing our development resources.
There are two main elements to our strategy. One is product development capabilities based on core technologies, and in particular, technologies for responding to higher recording speeds and multilayering of discs. The other is the early development of value-added products.
As the Blu-ray disc market takes shape, it is expected that a market will also be formed within it for value-added products. These include discs for professional broadcasting use where the highest levels of reliability are demanded and discs for camcorders. While there will naturally be a huge market for mass-marketed products as well, the market for value-added products is the first priority for TDK. We will channel resources to this segment to cement our earnings base so that we can remain the frontrunner in product development.
Our trumps cards are our thin-film sputtering technology, coating technologies and high-precision molding technologies. We fully intend to establish leading positions in terms of technology and development by leading the way in the development of multilayer discs.
As this slide shows, we expect demand for all-important value-added products to emerge gradually. By 2011, we expect this category to account for the equivalent of 130 million discs in a market expected to total 700 million Blu-ray discs.
This slide shows our product roadmap. By steadily working on the development of products, we will respond adroitly to demand for new products. This slide shows the development roadmap. Our approach will be to lead the way in adding value by developing multilayer discs and high-speed recording discs.
While my explanation of our business strategy has been brief, I want to reiterate that TDK possesses a wealth of valuable core technologies, which it will use to develop its business and ultimately increase enterprise value.
Looking ahead, although TDK will cease to be directly involved in the consumer business through its recording media products, we are convinced that by concentrating resources on the B2B business across the company that this approach will translate into greater corporate value for TDK as a whole.
Thank you for your attention.