Adobe 2007 Annual Report Download - page 32

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which offers a feature to save Microsoft Office documents as PDF files through a freely distributed plug-in, which competes
with Adobe PDF creation. Microsoft also has an Expression line of products targeted at designers and recently introduced
Silverlight, a web development tool for RIAs, which competes with Adobe Flash and Adobe Flex. In addition, companies,
such as Google, may introduce competing software offerings for free to support advertising models, or “open source”
vendors may introduce competitive 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.
For additional information regarding our competition and the risks arising out of the competitive environment in which we
operate, see the section entitled “Competition” contained in Item 1 of this report.
If we fail to successfully manage transitions to new business models and markets, our results of operations could be
negatively impacted.
We are devoting significant resources to the development of technologies and service offerings where we have a limited
operating history, including the enterprise and government markets, the mobile and device markets and software as a service
offerings. In the enterprise and government markets, we intend to increase our focus on vertical markets such as education,
financial services, manufacturing, and the architecture, engineering and construction markets and horizontal markets such as
training and marketing. These new offerings and markets require 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 the mobile and device markets,
and greater sales and marketing resources. In the mobile and device markets, our intent is to license our technology to device
makers, manufacturers and telecommunications carriers that embed our technology on their platforms, and in the enterprise
and government market our intent is to form strategic alliances with leading enterprise and government solutions and service
providers to provide additional resources to further enable penetration of such markets. If we are unable to successfully enter
into strategic alliances with device makers, manufacturers, telecommunication carriers and leading enterprise and government
solutions and service providers, 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. Another development is the software as a
service business model, by which companies provide applications, data and related services over the Internet. Providers use
primarily advertising or subscription-based revenue models. Recent advances in computing and communications
technologies have made this model viable and could enable the rapid growth of some of our competitors. We are exploring
the deployment of our own software as a service strategies, but may not be able to develop the infrastructure and business
models as quickly as our competitors. It is uncertain whether these strategies will prove successful. Additionally, from time
to time we “open source” certain of our technology initiatives and release selected technology for industry standardization.
These changes may make it easier for our competitors to produce products similar to ours, and if we are unable to respond to
these competitive threats, our business could be harmed.
Adverse changes in general economic or political conditions in any of the major countries in which we do business could
adversely affect our operating results.
As our business has grown, we have become increasingly subject to the risks arising from adverse changes in domestic
and global economic and political conditions. For example, the direction and relative strength of the U.S. economy has
recently been increasingly uncertain due to softness in the housing markets, rising oil prices, difficulties in the financial
services sector and continuing geopolitical uncertainties. If economic growth in the United States and other countries’
economies is slowed, many customers may delay or reduce technology purchases. This could result in reductions in sales of
our products, longer sales cycles, slower adoption of new technologies and increased price competition. Any of these events
would likely harm our business, results of operations and financial condition.
Political instability in any of the major countries we do business would also likely harm our business, results of
operations and financial condition.