Adaptec 2001 Annual Report Download - page 9

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We continue to participate in many influential industry standards bodies so w e can assist in
determining performance criteria and interoperability standards for the industry. This is critical
to helping us make chips that our customers will be able to deploy easily. In addition, w e work
with the Saturn Development Group (which we co-founded in 1992) to set new interface
specifications. As a result of these efforts, our products enable interoperable solutions for a
broad range of networking applications. To advance this process further, we have participated
with other leading semiconductor companies to demonstrate hardware interoperability. For
example, in 2001, w e collaborated with Xilinx Inc. and Altera Corp. (industry leading suppliers
of programmable logic devices) to successfully test the interoperability of our high-speed
devices.
Maintain fabless business model:
We believe that investing in the research and development of new devices is strategically more
important than trying to differentiate ourselves through manufacturing technologies.
Consequently, we do not own or operate any foundries and we design our products in
complementary metal oxide silicon (CMOS) at feature sizes down to 0.13 micron. We outsource
approximately 90% of our manufacturing requirements to Chartered Semiconductor
Manufacturing, Taiw an Semiconductor Manufacturing Corporation and IBM. By using
independent foundries to fabricate our wafers, we are better able to concentrate our resources
on the design, development and testing of new products. In addition, we avoid having to
commit the capital required to own and operate a fabrication facility.
S
EGMENT PERFORMANCE
We evaluate our performance based on gross profits of the netw orking and non-networking
segments. For information concerning revenues and profit by segment, see Note 13 to the
Consolidated Financial Statements.
S
ALES, MA RKETING AND DISTRIBUTION
Our sales and marketing strategy is to have our products designed into our customers’
equipment by developing superior products for which we provide premium service and
technical support. We maintain close working relationships with many of our customers. Our
marketing team is focused on developing new products that meet the needs of our customers in
the rapidly changing market of the telecommunications industry. We are often involved in the
early stages of design concerning our customers’ plans for new equipment. This helps us
determine if our existing products can be used in their new equipment or if more complex
devices need to be considered for the application. To assist us in our planning process, w e are
in constant contact with our largest customers to discuss industry trends, emerging standards
and their new product requirements. Based on their input and our feedback, w e gain a better
understanding of what functions and features they want integrated into our chips or chip set
solutions.
To promote our products, our marketing team is actively involved in demonstrating our
devices with other industry suppliers and providing technical information at trade shows held