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250 gigabytes disk drives were shipped into this segment to support new tape replacement applicationsfor disk drive technology. In early 2004, the available capacity per SATA drive had risen to 400gigabytes. Trend Focus believe that the growth in disk media volumes from 473 million in 2004 throughto over 741 million in 2007 will drive the need for further capital investments in disk processtechnology by both the disk drive companies and independent magnetic media suppliers. We believeour Storage Infrastructure strategy positions us well to take advantage of this new investment cycle inthe disk drive industry, particularly after the acquisition of magnetic disk media handling technology in2004 and our acquisition of precision cleaning process technology in 2005.Servo track writing and final disk drive testing are two standard steps that disk drive manufacturersperform in order to produce disk drives. Servo track writing is the process of laying down magneticpatterns on the surface of the disks. These patterns are used to define the location of circular tracks onwhich data is stored. The final test process stresses disk drives under extreme temperature and voltageenvironments and scans the surface of the disk to locate and isolate defects. These processes requireconsiderable production time and are costly for disk drive manufacturers. As the capacity of each diskdrive increases, as measured by areal density, so too does the number of tracks on each disk and henceproduction time. Using data supplied in a TrendFocus report from April 2005, we believe that theaverage gigabytes per drive was about 80 gigabytes in 2004 and is forecasted to grow to over 250gigabytes per drive in 2009. This represents a compound aggregate growth rate of 27%.The emergence in 2005 of perpendicular recording techniques within disk drives is a significantmarket dynamic and we estimate that it will be very difficult to achieve over 160 gigabyte per diskwithout it being actively deployed. Based on a report from one of our customers we believe that theaverage capacity per disk was 120 gigabytes in 2005, and forecast this amount to both double by 2007and also reach 480 gigabytes per disk by 2009. Perpendicular recording allows the magnetic circuit toflow perpendicularly through the layers of the disk rather than horizontally through the upper surfacelayers. This allows more magnetic material to be deployed per bit whilst simultaneously reducing thefootprint of each individual bit on the disc’s surface dramatically increasing the number of bits persquare inch. We believe that this increase in bits per inch also increases the sensitivity of the magneticmedia process to contamination as smaller defects are capable of affecting the magnetic performance ofthe disks. We believe this will result in increased investment cycles in precision cleaning equipment andautomated optical inspection techniques. We have seen significant additional capital investment inprecision cleaning process equipment in 2005.‘‘Over the next few years hard disk drive vendors will direct more resources towards reducingoperating expenditures through lower cost manufacturing, testing automation and standardizingprocesses,’’ according to John Buttress, IDC research manager for hard drives. ‘‘For example,automated testing equipment has enabled disk drive manufacturers to improve the overall efficiency offinal test processes, generating cost and cash flow benefits and time-to-market advantages.’’We believe that as the number of interfaces and disk drive options continue to proliferate into amultitude of end-user applications, disk drive manufacturers will increasingly seek partners to provideprocess automation solutions to deliver cost efficiencies, time-to-market advantages and enable theprioritization of internal resources in order to achieve strategic objectives.We design, develop and manufacture process automation solutions that enable customers to testand produce highly reliable disk drives and magnetic disk media with greater efficiency and at a lowercost. In addition, our next-generation test systems allow our customers to load, test and unload eachdrive individually and asynchronously. Our asynchronous testing systems reduce the time required forprocessing disk drives, allowing for a more efficient use of capital equipment. Our test systems areintegrated into our customers’ manufacturing floor control systems and can be remotely monitoredthroughout the testing process. We have established long-term relationships with leading disk drivemanufacturers, including Seagate Technology and Western Digital.25