HP 2012 Annual Report Download - page 25

are subject to significant economic, competitive and other uncertainties, some of which are beyond our
control. If these estimates and assumptions are incorrect, if we experience delays, or if other
unforeseen events occur, our business and results of operations could be adversely affected.
Competitive pressures could harm our revenue, gross margin and prospects.
We encounter aggressive competition from numerous and varied competitors in all areas of our
business, and our competitors may target our key market segments. We compete primarily on the basis
of technology, performance, price, quality, reliability, brand, reputation, distribution, range of products
and services, ease of use of our products, account relationships, customer training, service and support,
security, availability of application software, and Internet infrastructure offerings. If our products,
services, support and cost structure do not enable us to compete successfully based on any of those
criteria, our operations, results and prospects could be harmed.
We have a large portfolio of businesses and must allocate resources across all of those businesses
while competing with companies that have much smaller portfolios or specialize in one or more of
these product lines. As a result, we may invest less in certain areas of our businesses than our
competitors do, and these competitors may have greater financial, technical and marketing resources
available to them than our businesses that compete against them. Industry consolidation also may affect
competition by creating larger, more homogeneous and potentially stronger competitors in the markets
in which we compete, and our competitors also may affect our business by entering into exclusive
arrangements with existing or potential customers or suppliers.
Companies with whom we have alliances in some areas may be competitors in other areas. For
example, in the second quarter of fiscal 2011, an alliance partner that also markets a line of competing
servers announced that it intended to cease software development for our Itanium-based servers, which
has resulted in orders for our servers being canceled or delayed. While we have obtained a court ruling
finding that the alliance partner has an obligation to continue developing software for our Itanium-
based servers, we may continue to experience reduced demand. In addition, companies with whom we
have alliances also may acquire or form alliances with our competitors, thereby reducing their business
with us. Any inability to effectively manage these complicated relationships with alliance partners could
have an adverse effect on our results of operations.
We may have to continue lowering the prices of many of our products and services to stay
competitive, while at the same time trying to maintain or improve revenue and gross margin. The
markets in which we do business are highly competitive, and we encounter aggressive price competition
for all of our products and services from numerous companies globally. In addition, competitors in
some of the markets in which we compete who have a greater presence in lower-cost jurisdictions may
be able to offer lower prices than we are able to offer. Our results of operations and financial
condition may be adversely affected by these and other industry-wide pricing pressures.
Because our business model is based on providing innovative and high quality products, we may
spend a proportionately greater amount on research and development than some of our competitors. If
we cannot proportionately decrease our cost structure on a timely basis in response to competitive price
pressures, our gross margin and, therefore, our profitability could be adversely affected. In addition, if
our pricing and other factors are not sufficiently competitive, or if there is an adverse reaction to our
product decisions, we may lose market share in certain areas, which could adversely affect our revenue
and prospects.
Even if we are able to maintain or increase market share for a particular product, revenue could
decline because the product is in a maturing industry. Revenue and margins also could decline due to
increased competition from other types of products. For example, growing demand for an increasing
array of mobile computing devices and the development of cloud-based solutions may reduce demand
for some of our existing hardware products. In addition, refill and remanufactured alternatives for some
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