Interview with Michael Sklar,  Seagate Senior Director of Consumer Electronics Business Development: The Seagate Hard Drive in Xbox

ActiveWin.com: Has Microsoft and Seagate worked together in the past? How has the
relationship been between the two companies?

Michael Sklar: Seagate and Microsoft have had one of the longest-standing and successful relationships in the Consumer Electronics storage business. Our early relationship with the WebTV team helped bring
 the first hard drive-enabled consumer electronics device to market in 1997.

ActiveWin.com: Microsoft has also selected several other hard-drive manufacturers to
produce hard drives for Xbox, will Seagate be producing the majority?

Michael Sklar: Microsoft has two hard drive vendors of record, Seagate and WD. We've supplied more hard drives for consumer electronics than any other drive maker, and we're the highest volume shipper of hard drives overall. We think our technical and operational strengths position us well to compete vigorously for as much Xbox business as possible.

ActiveWin.com: Has Seagate selected the model or speed of the drive that will be
included for the Xbox?

Michael Sklar: We'd prefer to let Microsoft provide any details. The Xbox specification may cover this.

ActiveWin.com: What are some of the different things that players will be able to save
on the hard drive?

Michael Sklar: In general, hard drives are agnostic as to what they store. Microsoft has announced that the drive will store the operating system, game saves, extra downloaded levels, and user-customized audio tracks for games.

ActiveWin.com: How long is the contract for producing the hard drives?

Michael Sklar: The current agreement runs through mid-year 2003.

ActiveWin.com: It has been stated that the Xbox console will be produced in Hungary.
Will Seagate produce a predetermined amount of hard drives or will it
follow just-in-time inventory practices by producing as the demand is
needed?

Michael Sklar: This has not been determined yet. But certainly Seagate's global distribution and logistics capability was a key factor in Microsoft's decision to partner with us.

ActiveWin.com: Has Seagate worked with any other of the different manufacturers of the
different components in Xbox (such as Intel or NVIDIA) to ensure there are
no compatibility problems, etc.?

Michael Sklar: Currently, we don't anticipate any integration issues. Seagate and Microsoft will work through Seagate's CETEC (Consumer Electronics Testing and Engineering Center) to rigorously test all aspects of the Xbox's environment. CETEC is the storage industry's only Consumer
Electronics-dedicated testing, integration and analysis facility. For
example, CETEC has the facilities to precisely measure the effects of a
five-year-old pulling the console out of the entertainment center and onto
the floor -- then we can suggest chassis enhancements that render the five-year-old relatively harmless. Our Compatibility Labs are also there
to test the application under a number of different conditions.

ActiveWin.com: How do you think the current deal will improve Seagate's position as a
company that can use their products in a diversified marketplace?

Michael Sklar: The hard drive provides a compelling combination of performance, capacity, reliability and value for game manufacturers. As the industry leaders have become interested in the increased possibilities presented by the hard drive, they have been intrigued by Seagate's leadership position
and partnership approach.

We see the game console industry as being strategic to Seagate's continued 
growth and leadership, and we are uniquely prepared to partner with these
companies. Some analysts have said that hard drive sales for CE devices
may surpass sales into PCs within five years. When you factor in the
popularity of games, you can see this may be a very big opportunity. You probably know that games now constitute 50 percent of consumer PC software sales, and eighty-six percent of U.S. families with teens have game consoles. This will allow us to expand on our industry-leading presence in the CE
industry, which also includes personal video recorders, satellite and
cable set-top boxes, audio devices and web appliances.

ActiveWin.com: Where will the hard drives for the Xbox be produced?

Michael Sklar: This has not yet been determined. Seagate has state-of-the-art production facilities in Singapore, Malaysia and China with manufacturing capacity unmatched in the disc drive business.

ActiveWin.com: What do Seagate hard drives in general have over the competition?

Michael Sklar: As the world's largest producer of drives, Seagate offers unsurpassed value and the capability to support very large volumes. Seagate's drives are also the most robust in the industry, with the 3D Defense System -- the ability to withstand drops and other damage that occurs during integration -- built into every drive. 

Seagate also offers CETEC, an extensive menu of engineering services, to help our customers improve their products' time-to-market, decrease costs and increase reliability. Through our relationship with CacheVision, we can offer customers a full range of OEM solutions including intelligent digital storage modules.

ActiveWin.com: Has the internal development for the Xbox hard drive finished yet?

Michael Sklar: Seagate can't comment at this time.

ActiveWin.com: Will the hard drives for the Xbox be quieter than most that are in PC
computers? How will these hard drives be different than those Seagate
currently produces?

Michael Sklar: The Xbox will, from all reports, deliver an incredible audio experience, including the ability to customize a game's soundtracks by using music from CDs in the customer's collection. System acoustics will be a crucial spec for the Xbox, particularly since hard-core gamers know when the console sounds right and when it doesn't. Seagate's drives are among the quietest in the business, and CETEC can assist Microsoft in making the entire
system as quiet as possible. Microsoft's specification will detail acoustics
requirements, which will be met or exceeded by Seagate's offerings for
Xbox.

ActiveWin.com: Will the hard drive require defragmentation in order to rearranged
clusters to optimize performance? Will there be any other utilities if
errors occur?

Michael Sklar: Seagate has taken a leadership position in standardizing ATA command extensions that will make hard drives perform better in CE environments. While we can't comment on how Microsoft is designing the Xbox system, we do know that Seagate drives will be tested extensively with the Xbox system and applicable system tools.

ActiveWin.com: Does this hard drive have a MTTF (mean time to failure)? Has there
been any worries about overheating?

Michael Sklar: The Xbox specification will cover MTBF (mean time between failure) and thermal specifications. Microsoft and Seagate are confident that the drives will meet or exceed all specifications. CETEC is also available to help Microsoft design the system for the best possible thermal performance and reliability.

ActiveWin.com: Will the hard drive be FAT/FAT32 compatible?

Michael Sklar: The specification is, again, up to Microsoft. Seagate and Microsoft will collaborate on extensive testing to ensure that the drive meets or exceeds all of the specification's requirements.

ActiveWin.com: Do you have anything else to add?

Michael Sklar: We're very pleased to work with one of the best-known brands in the world on this strategic project; in gamer's talk, we're massively stoked about Xbox. With more drive shipments to the CE industry than all other competitors combined (according to TrendFocus), Xbox is another validation of Seagate's industry leadership and partnership approach. Our joint
qualification efforts with Microsoft have been very fruitful to date, and
we're looking forward to the fruits of our labor. To be specific, there'll
be one hell of a game party at Seagate the day Xbox ships!

Links

• Seagate Technology
• Microsoft Xbox Website

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