Motorola 2005 Annual Report Download - page 28

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hybrid fiber coaxial cable systems; integrated digital radios; and integrated public safety systems. These risks
include: (i) difficulties and delays in the development, production, testing and marketing of products; (ii) customer
acceptance of products; (iii) the development of industry standards; (iv) the significant amount of resources we
must devote to the development of new technology; and (v) the ability to differentiate our products and compete
with other companies in the same markets.
Our success, in part, will be affected by the ability of our wireless businesses to successfully compete in the
ever-evolving markets in which we participate. We face intense competition in these markets from both established
companies and new entrants. Product life cycles can be short and new products are expensive to develop and bring
to market.
Our success is dependent, in part, upon our ability to form successful strategic alliances. If these arrangements do
not develop as expected, our business may be adversely impacted.
We currently partner with industry leaders to meet customer product and service requirements and to develop
innovative advances in design and technology. Some of our partnerships allow us to supplement internal
manufacturing capacity and share the cost of developing next-generation technologies. Other partnerships allow us
to offer more services and features to our customers. If such arrangements do not develop as expected, our
business could be adversely impacted.
Our business will be harmed if we are found to have infringed intellectual property rights of third parties, or if our
intellectual property protection is inadequate to protect our proprietary rights.
Because our products are comprised of complex technology, we are involved in litigation regarding patent and
other intellectual property rights. Third parties have asserted, and in the future may assert, claims against us alleging
that we have infringed their intellectual property rights. If we do not succeed in any such litigation, we could be
required to expend significant resources to pay damages, develop non-infringing intellectual property or to obtain
licenses to the intellectual property that is the subject of such litigation. However, we cannot be certain that any
such licenses, if available at all, will be available to us on commercially reasonable terms. Also, defending these
claims may be expensive and divert the time and efforts of our management and employees.
Our patent and other intellectual property rights are important competitive tools and may generate income
under license agreements. We regard our intellectual property rights as proprietary and attempt to protect them
with patents, copyrights, trademarks, trade secret laws, confidentiality agreements and other methods. We also
generally restrict access to and distribution of our proprietary information. Despite these precautions, it may be
possible for a third party to obtain and use our proprietary information or develop similar technology
independently. In addition, effective patent, copyright, trademark and trade secret protection may be unavailable or
limited in certain foreign countries. Unauthorized use of our intellectual property rights by third parties and the cost
of any litigation necessary to enforce our intellectual property rights could have an adverse impact on our business.
Many of our components and products are manufactured by third parties and if third-party manufacturers lack
sufficient quality control or if there are significant changes in the financial or business condition of such third-
party manufacturers, it may have a material adverse effect on our business.
We rely on third-party suppliers for many of the components used in our products and we rely on third-party
manufacturers to manufacture many of our assemblies and finished products. If such third parties lack sufficient
quality control or if there are significant changes in the financial or business condition of such third parties, it could
have a material adverse effect on our business.
We also have third-party arrangements for the design or manufacture of certain products, parts and
components. If these third parties fail to deliver quality products, parts and components on time and at reasonable
prices, we could have difficulties fulfilling our orders and our sales and profits could decline.
There is no guarantee that design wins will become actual orders and sales.
A ""design win'' occurs when a customer or prospective customer notifies us that our product has been selected
to be integrated with the customer's product. There can be delays of several months or more between the design
win and when a customer initiates actual orders. The design win may never become an actual order or sale.