Plantronics 2008 Annual Report Download - page 12

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6
Other
· The remainder of the AEG products, which represent a small portion of total AEG net revenues, include speech recognition
and VoIP (headsets) markets, a wide array of headphone products for portable stereos, CD players, MP3 players and other
audio devices, and home audio and home theater products.
In the second quarter of fiscal 2008, the Company transitioned the responsibility and management of Altec Lansing branded PC
headsets from the AEG segment to the ACG segment, and as a result, effective July 1, 2007, the revenue and resulting gross profit
from all PC headsets is now included in the ACG reporting segment within the Gaming and Computer Audio category.
FOREIGN OPERATIONS
In fiscal 2006, 2007 and 2008 net revenues outside the U.S. accounted for approximately 36%, 39% and 39%, respectively, of our
total net revenues. Revenues derived from foreign sales generally are subject to additional risks such as fluctuations in exchange rates,
increased tariffs, the imposition of other trade barriers, and potential currency restrictions. In fiscal 2008, we continued to engage in
hedging activities to limit our transaction and economic exposures, and to mitigate our exchange rate risks. We hedged a portion of
our positions in the Euro and the Great British Pound, which constitute the most significant portion of our currency exposure. Further
information regarding our foreign operations, as required by Item 101(d) of Regulation S-K, can be found in the consolidated financial
statements.
COMPETITION
The market for our products is very competitive and some of our competitors have significant financial resources, as well as
production, marketing, engineering and other capabilities to develop, manufacture, market and sell their products.
In the ACG segment, one of our primary competitors is GN Netcom, a subsidiary of GN Great Nordic Ltd., a Danish
telecommunications conglomerate, who competes with us in the office, contact center, and mobile markets and on a limited scale, in
the PC market. In addition, Motorola and Logitech are significant competitors in the consumer headset market and Sennheiser
Communications is a competitor in the computer, office and contact center markets. We also believe there may be increased
competition from the major cell phone device makers such as Nokia, Motorola, Sony and Samsung.
We believe the principal factors for ACG to be successful and competitive in each of its markets are the following:
· Office market - performance, product design and style, comfort, simplicity, price and reliability. We also believe that our
brand, reputation and channels of distribution are important success factors;
· Contact center market - performance, reliability, price, comfort, style and support;
· Mobile market - product styling, competitive pricing, simplicity of product operation, product reliability, product features,
sound quality, comfort, fit, ability to meet delivery schedules, customer service and support, reputation, distribution, warranty
terms, and product life;
· Gaming and entertainment market - in retail channel, the primary factors for success are differentiated packaging, price,
superior microphone and speaker performance and headset style and color ;
· OEM business - key success factors are meeting unique requirements within customer timeframes, unique styling, excellent
sound, product simplicity, price targets, and consistent quality with low defect rates; and
· Specialty products - key success factors are performance, reliability, end-user support and price.
In the AEG segment, our major competitors include Bose, Apple, Logitech, Creative Labs, iHome, and Harman International. AEG
predominantly serves the consumer electronics market. This market is principally served by the retail channel and, to a lesser extent,
through certain OEMs. We are experiencing a new dynamic in the consumer electronics industry driven by the digital evolution that is
influencing the way consumers look for solutions to their musical entertainment needs. Our key competition is coming from new and
existing solution providers that offer a convenient, cost effective and lifestyle-compatible method of delivering content when people
want it, where they want it, and how they want it.