Avid 1998 Annual Report Download - page 12

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channel, the Company has increased its support of top customers, while the proportion of revenues generated through its
indirect channels has been increased.
The Company maintains sales offices in 31 cities in 15 countries and has relationships with more than 500 distributors,
VARs and dealers throughout the world.
Pro Tools|24 and other Digidesign-developed products are sold generally through dealers and distributors. Because this
channel tends to focus on music-related products, there is, currently, little overlap between this channel and Avid’ s video
and film market sales channel.
Avid currently provides direct customer support through regional telephone support centers and field service representatives
in major markets. Support offerings include up to 24-hour, seven day-per-week options for both telephone support and on-
site representation, hardware replacement and software upgrades. In addition, customer support is provided by VARs and
distributors and other authorized providers.
Customer training is provided directly by Avid and through a network of 42 authorized third-party Avid training centers in
11 countries.
MANUFACTURING AND SUPPLIERS
Avid’ s manufacturing operations consist primarily of the testing of subassemblies and components purchased from third
parties, the duplication of software and the configuration, assembly and testing of board sets, software, related hardware
components, and complete systems. Avid relies on independent contractors to manufacture components and subassemblies
to Avid’ s specifications. Avid’ s systems undergo testing and quality assurance at the final assembly stage.
The Company is dependent upon sole source suppliers for certain key components used in its products. Products purchased
by the Company or its VARs and distributors from sole source vendors include computers from Apple, SGI, IBM and
Intergraph; video compression chips manufactured by C-Cube Microsystems; a small computer systems interface (“SCSI”)
accelerator board from ATTO Technology; a 3D digital video effects board from Pinnacle Systems; application specific
integrated circuits (“ASIC”) from Chip Express and LSI Logic; digital signal processing integrated circuit from Motorola; a
fibre channel adapter from JNI; a fibre channel storage array from Data General’ s Clariion division; and a PCI expansion
chassis from Magma Inc. The Company purchases these sole source components pursuant to purchase orders placed from
time to time. The Company also manufactures certain circuit boards under license from Truevision (a subsidiary of
Pinnacle Systems). The Company generally does not carry significant inventories of these sole source components and has
no guaranteed supply arrangements. These purchasing arrangements can result in delays in obtaining products from time to
time. No assurance can be given that sole source suppliers will devote the resources necessary to support the enhancement
or continued availability of such components or that any such supplier will not encounter financial difficulties. While the
Company believes that alternative sources of supply for its sole source components could be developed, its business and
results of operations could be materially adversely affected if it were to encounter an interruption in its sources of supply.
Avid has manufacturing facilities in Tewksbury, Massachusetts; Dublin, Ireland; and Palo Alto and Menlo Park, California.
RESEARCH AND DEVELOPMENT
Avid’ s research and development efforts are focused on the development of digital media content creation tools and
workgroup solutions that operate on Windows-based, IRIX-based and Apple computers. This includes the development and
enhancement of best-in-class video, film, 3D animation and audio editing systems to meet the needs of professionals in the
television, film, music, broadcast news production, and industrial post-production markets, and of end-users in the
consumer, educational and corporate markets. As these digital tools proliferate, all-digital production cycles are becoming
possible. Avid’ s research and development efforts therefore also include networking and storage initiatives to deliver
standards-based media transfer and media asset management tools, as well as standalone and network-attached media
storage systems for workgroups. The Company undertakes research and development activities in Tewksbury,
Massachusetts; Palo Alto, California; Santa Monica, California; Montreal, Quebec; and London, England.
COMPETITION
The markets for Avid’ s products are highly competitive and subject to rapid change. Competition is fragmented with a large
number of suppliers providing different types of products to different markets.