Lexmark 2010 Annual Report Download - page 36

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Management sees growth opportunities in large/global enterprises with a distributed workforce, in
organizations that are seeking to optimize their content-related infrastructure and reduce costs, and in
functional areas where workers rely on mobile devices for productivity.
The demand for ECM solutions is strong in large and emerging markets alike, representing a considerable
growth opportunity of Perceptive Software. The Company’s ECM solutions are already installed in geographies
around the world, and management believes this global customer base serves as an impetus for additional
installations outside of North America. Customers continue to purchase ECM solutions that result in greater
efficiency and productivity in their various lines of business and back office operations.
Business systems such as enterprise resource planning (ERP), EMR, and customer relationship
management (CRM) systems represent a mature market and remain vital applications but do not
satisfy an organization’s enterprise content management needs. The Company expects organizations
to continue to look to ECM solutions to complete their enterprise information infrastructure, increasing the
value of their core business system investments and leading to gains in efficiency.
Challenges and Risks
In recent years, Lexmark and its principal competitors, many of which have significantly greater financial,
marketing and/or technological resources than the Company, have regularly lowered prices on printers
and are expected to continue to do so.
Other challenges and risks faced by Lexmark include:
• The Company must compete with its larger competitors for retail shelf space allocated to printers
and their associated supplies.
• New product announcements by the Company’s principal competitors can have, and in the past,
have had, a material adverse effect on the Company’s financial results.
• With the convergence of traditional printer and copier markets, major laser competitors now include
traditional copier companies.
• The Company sees other competitors and the potential for new entrants into the laser and inkjet
markets possibly having an impact on the Company’s growth and market share.
• The Company expects competition will continue to intensify as the ECM markets consolidate. The
Company sees other competitors and the potential for new entrants into the ECM markets possibly
having an impact on the Company’s strategy to expand in these markets.
• Lexmark expects that as it competes with larger competitors, the Company may attract more
frequent challenges, both legal and commercial, including claims of possible intellectual property
infringement.
• Refill, remanufactured, clones, counterfeits and other compatible alternatives for some of the
Company’s cartridges are available and compete with the Company’s supplies business. As the
installed base of laser and inkjet products matures, the Company expects competitive supplies
activity to increase.
• Historically, the Company has not experienced significant supplies pricing pressure, but if supplies
pricing was to come under significant pressure, the Company’s financial results could be materially
adversely affected.
• Global economic uncertainty and difficulties in the financial markets could impact the Company’s
future operating results.
Refer to the sections entitled “Competition — ISS” and “Competition — Perceptive Software” in Item 1,
which are incorporated herein by reference, for a further discussion of major uncertainties faced by the
industry and the Company. Additionally, refer to the section entitled “Risk Factors” in Item 1A, which is
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