HAMR Qualification and Timing
Q: What's your conviction level on HAMR qualification timing?
A: We are confident that HAMR will qualify for our first major cloud customer in the September quarter, as we've resolved supplier issues and proven performance in tests.

Capacity Expansion Strategy
Q: How are you approaching capacity expansion amid rising demand?
A: We're being cautious with adding capacity; focusing on predictability and product transitions to meet exabyte demand without significant new CapEx. ,

Gross Margin Outlook
Q: How should we think about gross margin improvements ahead?
A: We're pleased with the gross margin trend, which was higher than expected last quarter due to pricing actions and cost reductions; we expect further improvements. ,

Pricing Trajectory
Q: Can you discuss pricing trends and outlook?
A: We've increased pricing based on strong demand, particularly in cloud; pricing is improving and contributes to gross margin growth.

Market Share Concerns Amid HAMR Delay
Q: Are you worried about losing market share due to HAMR delays?
A: We're not concerned; we offer a range of products to meet customer demand and focus on predictability, so market share isn't at risk.

Mass Capacity Demand Outlook
Q: What's the outlook for mass capacity demand from here?
A: Demand is improving but not yet back to normal; we're cautiously optimistic and will aggressively drive product introductions to meet future growth.

Underutilization Charges Impact
Q: How will underutilization charges affect gross margins?
A: We don't expect significant underutilization costs in fiscal '25, which will help improve our gross margins. ,

Debt Reduction Plans
Q: What are your plans for reducing debt and strengthening the balance sheet?
A: We've reduced debt from $6.2 billion to $5.7 billion and aim to bring it down to around $5 billion, improving our liquidity and financial position.

AI Impact on Storage Demand
Q: How is AI affecting your storage demand?
A: While AI applications are in early stages, we see future opportunities in data creation and storage needs driven by AI, particularly at the edge.

SMR Technology's Effect on Margins
Q: How does SMR adoption impact gross margins?
A: SMR helps with capacity points but doesn't significantly affect margins; we provide what customers need without margin concerns.

Pricing Commitments and Gross Margins
Q: How much of your exabyte commitments have locked-in pricing?
A: Much of our bookings were made as demand rose; we're confident in pricing and volume for the back half of the year, which supports gross margin growth.

Enterprise On-Prem Demand
Q: What's the outlook for enterprise on-prem storage demand?
A: Visibility is less than with cloud, but we expect improvement in fiscal '25 as AI applications drive on-prem storage needs.

Utilization Levels
Q: What are current utilization levels, and how will they change?
A: Utilization is generally high; we don't anticipate significant underutilization impacts in fiscal '25, aiding cost and margin improvements.

Impact of AI Chips in PCs
Q: How will AI chips in PCs affect storage demand?
A: It's an interesting development; new applications could drive data creation and storage needs, though adoption may be initially slow.

Firmware Updates and Qualification
Q: What's the status of your firmware updates affecting HAMR qualification?
A: We're confident in the firmware qualification; test beds are running, and we've addressed previous issues.