Computer Associates 2007 Annual Report Download - page 29

Our competitors include large vendors of hardware or operating system software and/or service providers. The widespread
inclusion of products that perform the same or similar functions as our products bundled within computer hardware or other
companies’ software products, or services similar to those provided by us, could reduce the perceived need for our products
and services, or render our products obsolete and unmarketable. Furthermore, even if these incorporated products are inferior
or more limited than our products, customers may elect to accept the incorporated products rather than purchase our
products. In addition, the software industry is currently undergoing consolidation as software companies seek to offer more
extensive suites and broader arrays of software products and services, as well as integrated software and hardware solutions.
This consolidation may negatively impact our competitive position, which could adversely affect our business, financial
condition, operating results and cash flow. Refer to Item 1, “Business — (c) Narrative Description of the Business —
Competition”, for additional information.
Failure to adapt to technological change in a timely manner could adversely affect our revenues and earnings.
If we fail to keep pace with technological change in our industry, such failure would have an adverse effect on our revenues and
earnings. We operate in a highly competitive industry characterized by rapid technological change, evolving industry
standards, changes in customer requirements and frequent new product introductions and enhancements. During the
past several years, many new technological advancements and competing products entered the marketplace. The distributed
systems and application management markets in which we operate are far more crowded and competitive than our traditional
mainframe systems management markets. Our ability to compete effectively and our growth prospects depend upon many
factors, including the success of our existing distributed systems products, the timely introduction and success of future
software products, and the ability of our products to interoperate and perform well with existing and future leading databases
and other platforms supported by our products.We have experienced long development cycles and product delays in the past,
particularly with some of our distributed systems products, and expect to have delays in the future. In addition, we have
incurred, and expect to continue to incur, significant research and development costs, as we introduce new products. If there
are delays in new product introductions or less-than-anticipated market acceptance of these new products, we will have
invested substantial resources without realizing adequate revenues in return, and our revenues and earnings could be
adversely affected.
If our products do not remain compatible with ever-changing operating environments we could lose customers and the
demand for our products and services could decrease, which would negatively impact sales and revenue.
IBM, HP, Sun Microsystems, EMC and Microsoft are the largest suppliers of systems and computing software and, in most
cases, are the manufacturers of the computer hardware systems used by most of our customers. Historically, these
developers have modified or introduced new operating systems, systems software and computer hardware. In the future, such
new products could incorporate features that perform functions currently performed by our products, or could require
substantial modification of our products to maintain compatibility with these companies’ hardware or software. Although we
have to date been able to adapt our products and our business to changes introduced by hardware manufacturers and system
software developers, there can be no assurance that we will be able to do so in the future. Failure to adapt our products in a
timely manner to such changes or customer decisions to forego the use of our products in favor of those with comparable
functionality contained either in the hardware or operating system could have a material adverse effect on our business,
financial condition, operating results and cash flow.
Certain software that we use in daily operations is licensed from third parties and thus may not be available to us in the
future, which has the potential to delay product development and production and, therefore, could adversely affect our
revenues and profits.
Some of our products contain software licensed from third parties. Some of these licenses may not be available to us in the
future on terms that are acceptable to us or allow our products to remain competitive.The loss of these licenses or the inability
to maintain any of them on commercially acceptable terms could delay development of future products or the enhancement
of existing products. We may also choose to pay a premium price for such a license in certain circumstances where continuity
of the product would outweigh the premium cost of the license. There can be no assurance that, at a given point of time, any of
the above will not have an adverse impact on our business, financial condition, operating results and cash flow.
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