Blackberry 2012 Annual Report Download - page 74

An expansion of the Company’s online commercial presence may also require significant additional investment in security measures
to protect the transmission of confidential data, including payment information, and to augment protection for the Company’s servers
and network. Any failure by the Company to implement adequate measures around security of payments, or security of confidential
or personal information of the end users of the Company’s products, could result in regulatory enforcement, potential litigation and
have a detrimental impact on the BlackBerry brand and the Company’s reputation. For example, failure by the Company to comply
with applicable laws, regulations and practices imposed or supported by the payment card industry relating to the security of
payments could result in sanctions by individual card providers (including prohibiting the Company from processing a card provider’s
card), regulatory sanctions, fines or litigation under applicable privacy laws or reputational damage. Applications may also require an
interface with third parties over which the Company has no control. If the Company is not able to successfully expand, support or
market the applications catalogue, or if necessary third-party interfaces are not available to support the applications, the Company
may lose market share, and its business, results of operations and financial condition may be adversely affected.
The Company relies upon third parties to manufacture and repair its products and it is exposed to the risk that these
third parties may not be able to satisfy its manufacturing needs and repairs on a timely basis or to an appropriate
quality standard.
The Company outsources the majority of the manufacturing and repair of its products to third parties. Third party manufacturers, or
other third parties to which such third party manufacturers in turn outsource the Company’s manufacturing requirements, may not be
able to satisfy the Company’s manufacturing requirements on a timely basis, including the failure to meet scheduled production and
delivery deadlines or the failure to manufacture products to meet the product quality requirements of the Company and its customers.
In addition, the Company may not be able to obtain additional or substitute manufacturers when and if needed or on a cost-effective
basis, which could materially impair the Company’s ability to supply devices to its customers. The Company’s reliance on
outsourcing its manufacturing requirements to third parties may involve a number of other risks, including:
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• an inabilit
y
to obtain ade
q
uate manufacturin
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ca
p
acit
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and reduced control over deliver
y
schedules and costs;
• concerns re
g
ardin
g
q
ualit
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control;
• risks relating to the use of third party manufacturers in foreign jurisdictions where maintaining the integrity of the control
s
y
stems im
p
lemented b
y
the Com
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an
y
ma
y
be more difficult to monitor and mana
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e;