2 MOBILE COMMUNICATIONS COMPANY The Mobile Communications Company offers a wide range of products that allows everyone to access the network environment at the heart of today's broadband age. In the next generation cellular phone market we will support both major platforms, W-CDMA and cdma2000 1x. As we do so, we will promote our advantage in multimedia features such as moving pictures and GPS func- tions. In addition to the Japanese and the North American markets, we will penetrate the Euro- pean and Chinese markets. In the mobile products market, we have already launched the “GENIO e” PDA as well as wireless PDAs. We will further enhance our product lineup in this field in order to position Toshiba as an innovator and industry leader. Toshiba is an established technology and market leader in storage devices, and this was re- flected in significant sales growth in our newest prod- uct, the 1.8-inch HDD that is increasingly popular in smaller portable PCs, mobile MP3 players and PCI- card HDDs. Combination DVD-ROM and CD-R/RW drives, another product that we pioneered in the market, also recorded notable sales growth, particu- Broadband technologies and wireless solu- tions are finally ready for the main stage and we are ready to deploy them. Our strategy for the office is centered on wireless LAN technology; a completely seamless office environment equipped with portable PCs, tablet PCs, PDAs, mobile IPs and security tech- nologies. In the home, we have already launched “TransCube,” which stands at the heart of a versa- tile wireless environment supporting portable PCs and other equipment. We took decisive measures to meet these challenges, and independent figures confirm that we regained the leading share in the world portable PC market in the first calendar quarter of 2002. We will seek to retain this by continuing to introduce differ- entiated products to the market ahead of our com- petitors, and by proactively pursuing regional strate- gies rooted in local wants and preferences. Our goals are a larger market share, accompanied by higher sales and profit. ing in the United States spurred intensive price com- petition as demand weakened, a reality that soon spread to Europe and beyond. Toshiba’s position in these severe conditions was not helped by delays in product launches. larly in slim models for incorporation in portable PCs. Our key magnetic drive over the last few years has been the 2.5-inch HDD. Constant innovation pushed data storage capacity to 60 gigabytes in fis- cal 2001, and earned the 2.5-inch drive new applica- tions in car navigation systems and digital home appliances. This latter area is particularly promising as digital convergence makes itself felt in the home. In the visual products business, Toshiba de- livers a complete range of products for the home: flat-screen TVs for analog and BS digital broadcasts, projection TVs, LCD data projectors and DVD players and recorders. Lower hardware prices and an ever-increas- ing selection of software products fueled rapid growth in demand for DVD players. However, price competi- tion has grown with demand and was particularly fierce in the North American market, which accounts for half of worldwide demand. This brought about a sharp decline in profit margins. The same combina- tion of lower prices and more software triggered a remarkable expansion in the Japanese market, which soared 200 percent from the previous year. VHS video and DVD players combined in a single unit attracted many customers. Demand for DVD recorders has also shown rapid growth, and the single-unit HDD/DVD-RAM, which we introduced ahead of our rivals, has been very popular. The “Digital Face Plasma 35P2700” is an all-in-one model with a 35-inch screen that fits into the same space as a conventional 21-inch TV. Combination HDD and DVD digital video recorders are growing in popularity. Toshiba’s latest, the “RD-X2,” can store up to 35 hours of programming on an 80GB HDD and save selected pro- grams to a DVD-R. MOBILE COMMUNICATIONS COMPANY President TETSUYA MIZOGUCHI 24