Adobe 2004 Annual Report Download - page 43

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our Intelligent Documents product line. Given Microsoft’s market dominance, InfoPath, or any new competitive
Microsoft product or technology that is bundled as part of its Office product or operating system, could harm our
overall Intelligent Documents market opportunity. In addition, Microsoft is developing the next generation of its
Windows operating system, codenamed Longhorn. It is anticipated that Microsoft will add new electronic document
capabilities to Longhorn, providing additional competition to our Intelligent Documents products and solutions.
Also, some enterprise vendors provide intelligent document capabilities that could directly or indirectly compete
with our Intelligent Documents products. Additionally, content creation/management tools that use other formats for
electronic document distribution provide alternate solutions to customers, and indirectly compete with Adobe’s
Intelligent Documents products and the use of Adobe PDF. We also are seeing an increase in competition from
clone PDF products marketed by other companies. Other competitors, including Microsoft, Apple and Google, may
increase their presence in the digital imaging markets. We also face competition from certain Open Source products.
Additionally, many digital camera manufacturers are bundling their own or our competitors’ digital imaging and
video software products with their digital camera products. If these competing products achieve widespread
acceptance, our operating results could suffer. In addition, consolidation has occurred among some of the
competitors in our markets. Any further consolidations among our competitors may result in stronger competitors
and may therefore harm our results of operations.
If we fail to successfully manage transitions to new business models or markets our results of operations could be
negatively impacted.
We are devoting significant resources to the development of technologies and service offerings to address
demands in the marketplace for document generation, document process management, document collaboration, and
document control and security. As a result, we are transitioning to new business models and seeking to broaden our
customer base in the enterprise and government markets, requiring a considerable investment of technical, financial
and sales resources, and a scaleable organization. Many of our competitors may have advantages over us due to their
larger presence, larger developer network, deeper experience in the enterprise and government markets, and greater
sales and marketing resources. It is our intent to form strategic alliances with leading enterprise and government
solutions and service providers to provide additional resources to further enable penetration of the enterprise and
government markets. If we are unable to successfully enter into strategic alliances, or if they are not as productive as
we anticipate, our market penetration may not proceed as rapidly as we anticipate and our results of operations could
be negatively impacted.
Our limited operating history with Adobe Creative Suite products makes it difficult to predict the revenue effect
of the Adobe Creative Suite product cycle and the individual products integrated within these products.
If we fail to anticipate and develop new products in response to changes in demand for application software,
computers and printers our business could be harmed.
We offer our application-based products primarily on Windows and Macintosh platforms and on some UNIX
platforms. We generally offer our server-based products, but not desktop application products, on the Linux
platform as well as the Windows and UNIX platforms. To the extent that there is a slowdown of customer purchases
of personal computers on either the Windows or Macintosh platform or in general, or to the extent that significant
demand arises for our products or competitive products on the Linux desktop platform before we choose and are
able to offer our products on this platform, our business could be harmed.
We may incur substantial costs enforcing our intellectual property rights and defending against third-party claims
as a result of litigation or other proceedings.
In connection with the enforcement of our own intellectual property rights or in connection with disputes
relating to the validity or alleged infringement of third-party rights, including but not limited to patent rights, we
have been, are currently and may in the future be subject to claims, negotiations or complex, protracted litigation.
Intellectual property disputes and litigation are typically very costly and can be disruptive to our business operations
by diverting the attention and energies of management and key technical personnel. Although we have successfully
defended or resolved past litigation and disputes, we may not prevail in any ongoing or future litigation and
disputes. Adverse decisions in such litigation or disputes could have negative results, including subjecting us to
significant liabilities, requiring us to seek licenses from others, preventing us from manufacturing or licensing