ADT 2012 Annual Report Download - page 105

Our future growth is largely dependent upon our ability to successfully compete with new and existing
competitors by developing or acquiring new technologies that achieve market acceptance with acceptable
margins.
Our business operates in markets that are characterized by rapidly changing technologies, evolving industry
standards and potential new entrants. For example, a number of cable and other telecommunications companies
have introduced security services offerings, including interactive security services, that are competitive with our
products and services. If these services gain market acceptance, our ability to grow our business, in particular our
ADT Pulse offering, could be materially and adversely affected. Accordingly, our future success depends upon a
number of factors, including our ability to accomplish the following: identify emerging technological trends in
our target end-markets; develop, acquire and maintain competitive products and services; enhance our products
and services by adding innovative features that differentiate us from our competitors; and develop or acquire and
bring products and services to market quickly and cost-effectively. Our ability to develop or acquire new
products and services based on technological innovation can affect our competitive position and requires the
investment of significant resources. These acquisitions and development efforts divert resources from other
potential investments in our businesses, and they may not lead to the development of new technologies, products
or services on a timely basis. Moreover, as we introduce new products such as ADT Pulse, we may be unable to
detect and correct defects in the product or in its installation, which could result in loss of sales or delays in
market acceptance. New or enhanced products may not satisfy consumer preferences and potential product
failures may cause consumers to reject our products. As a result, these products may not achieve market
acceptance and our brand image could suffer. In addition, our competitors may introduce superior designs or
business strategies, impairing our brand and the desirability of our products and services, which may cause
consumers to defer or forego purchases of our products and services. In addition, the markets for our products
and services may not develop or grow as we anticipate. The failure of our technology, products or services to
gain market acceptance, the potential for product defects or the obsolescence of our products and services could
significantly reduce our revenue, increase our operating costs or otherwise adversely affect our business,
financial condition, results of operations or cash flows.
Failure to maintain the security of our information and technology networks, including personally
identifiable and other information could adversely affect us.
We are dependent on information technology networks and systems, including the Internet, to process,
transmit and store electronic information and, in the normal course of our business, we collect and retain
significant volumes of certain types of personally identifiable and other information pertaining to our customers
and employees, including video images of customer sites. The legal, regulatory and contractual environment
surrounding information security and privacy is constantly evolving and companies that collect and retain such
information are under increasing attack by cyber-criminals around the world. A significant actual or potential
theft, loss, fraudulent use or misuse of customer, employee or other personally identifiable data, whether by third
parties or as a result of employee malfeasance or otherwise, non-compliance with our contractual or other legal
obligations regarding such data or a violation of our privacy and security policies with respect to such data could
result in significant costs, fines, litigation or regulatory actions against us. Such an event could additionally result
in adverse publicity and therefore adversely affect the market’s perception of the security and reliability of our
services, which could result in lost sales and increased customer attrition. In addition, we depend on our
information technology infrastructure for business-to-business and business-to-consumer electronic commerce.
Security breaches of, or sustained attacks against, this infrastructure could create system disruptions and
shutdowns that could result in disruptions to our operations. Increasingly, our security and home/business
automation products and services are accessed through the Internet, and security breaches in connection with the
delivery of our services via the Internet may affect us and could be detrimental to our reputation, business,
operating results and financial condition. We cannot be certain that advances in criminal capabilities, new
discoveries in the field of cryptography or other developments will not compromise or breach the technology
protecting the networks that access our products and services. If any one of these risks materializes our business,
financial condition, results of operations and cash flows could be materially and adversely affected.
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