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Table of Contents
Consumers, businesses and service providers demand a complete set of wired and wireless networking and broadband products that are tailored to
their specific needs and budgets and also incorporate the latest networking technologies. These users require the continual introduction of new and
refined products and often lack extensive IT resources and technical knowledge. Therefore, they demand 'plug-and-play' or easy-to-
install and use
products that require little or no maintenance, and customer service and support. We believe that these users also prefer the convenience of obtaining a
networking solution from a single company with whom they are familiar; as these users expand their networks, they tend to be loyal purchasers of that
brand. In addition, purchasing decisions of users in these markets are also driven by the affordability of networking products. To provide reliable, easy-
to-use products at an attractive price, we believe a successful supplier must have a company-
wide focus on the unique requirements of these markets,
operational discipline and cost-efficient infrastructure and processes that allow for efficient product development, manufacturing and distribution.
Sales Channels
We sell our products through multiple sales channels worldwide, including traditional retailers, online retailers, wholesale distributors, direct
market resellers ("DMRs"), value-added resellers ("VARs"), and broadband service providers.
Wholesale Distribution. Our distribution channel supplies our products to retailers, e-
commerce resellers, DMRs, VARs and broadband service
providers. We sell directly to our distributors, the largest of which are Ingram Micro, Inc., D&H Distributing Company and Tech Data Corporation.
Retailers.
Our retail channel primarily supplies products that are sold into the consumer market. We sell directly to, or enter into consignment
arrangements with, a number of our traditional and online retailers. The remaining traditional retailers, as well as our online retailers, are fulfilled
through wholesale distributors. We work directly with our retail channels on market development activities, such as co-advertising, on-
line promotions
and video demonstrations, instant rebate programs, event sponsorship and sales associate training.
DMRs and VARs.
We primarily sell into the commercial business marketplace through an extensive network of DMRs and VARs. Our DMRs
include companies such as CDW and Insight. VARs include our network of registered Powershift Partners, and resellers that are not registered in our
Powershift partner program. DMRs and VARs may receive sales incentives, marketing support and other program benefits from us. Our DMRs and
VARs generally purchase our products through our wholesale distributors.
Broadband Service Providers.
We also supply our products directly to broadband service providers in the United States and internationally
providing cable, DSL and 4G LTE broadband. Service providers supply our products to their business and home subscribers.
The largest portion of our net revenues was derived from Americas sales in the year ended December 31, 2013
. The Americas sales as a
percentage of net revenue increased from 53.4% in the year ended December 31, 2012 to 57.7% in the year ended December 31, 2013
. We have
continuously committed resources to expanding our international operations and sales channels. Accordingly, we are subject to a number of risks related
to international operations such as macroeconomic and microeconomic conditions, geopolitical instability, preference for locally branded products,
exchange rate fluctuations, increased difficulty in managing inventory, challenges of staffing and managing foreign operations, the effect of international
sales on our tax structure, and changes in local tax laws. See Note 12,
Segment Information, Operations by Geographic Area and Customer
Concentration , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-
K, for further discussion of net
revenues by geographic region.
None of our customers accounted for 10% or greater of our net revenue in the years ended December 31, 2013 and 2012. Retail company Best
Buy, Inc. and distributor Ingram Micro, Inc. each accounted for 10% or greater of our net revenues in the year ended December 31, 2011
. See Note 12,
Segment Information, Operations by Geographic Area and Customer Concentration
, in Notes to Consolidated Financial Statements in Item 8 of Part II
of this Annual Report on Form 10-K, for further details on customer concentrations.
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