Adaptec 2002 Annual Report Download - page 8

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Provide first−class products, customer service and technical support:
We work very closely with our customers to ensure they get the best service and technical support required
to assist them with their development efforts. As the marketplace for telecommunications equipment suppliers
slowly consolidates, we believe our largest customers and their products will take an increasing percentage
of the overall market in their areas of expertise. Customers such as Cisco, Hewlett Packard, Lucent, Nortel,
Alcatel, Samsung, Fujitsu, Ricoh, ZTE, Huawei and Juniper are aligning their design and manufacturing
operations with key suppliers like PMC−Sierra.
SALES, MARKETING 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 our target markets. 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 new devices need to be considered for the application. To assist us
in our planning process, we are in regular contact with our largest customers to discuss industry trends,
emerging standards and their new product requirements.
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 in North America, Asia and
Europe. Technical support is essential to our customers' success, and we provide this through field
application engineers, technical marketing and factory systems engineers. We also provide more detailed
information and support for our product line through our corporate website and special customer−accessible
extranet sites. We believe that providing comprehensive product service and support is critical to
shortening customers' design cycles and maintaining a competitive position in the networking market.
We sell our products both directly and through distributors and independent manufacturers' representatives.
In 2002, approximately 36% of our orders were shipped through our distributors; approximately 45% were sent
by us directly to contract manufacturers selected by OEMs; and the balance were sent directly to our OEM
customers.
Our largest distributor is Memec Group Holdings Ltd. which represents our products worldwide (excluding
Japan, Israel, Taiwan and Australia). Many of our customers are seeking to reduce supply chain costs and are
requesting that we ship more of our products directly to the contract manufacturers they have selected.
Based on this trend, we expect that over time our largest customers will require that we ship a higher
percentage of their orders directly to contract manufacturers and a lower percentage will be shipped through
our distributors.
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