Plantronics 2010 Annual Report Download - page 12

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4
The office market represents our largest revenue and profit growth opportunity. The contact center market is our most mature market,
and we expect the long-term outlook to grow slowly. We expect that contact centers will increasingly adopt VoIP technology to help
improve productivity and reduce costs. We develop headsets specifically tailored to VoIP applications and, as VoIP adoption
increases, we believe that we will continue to lead in new product performance.
Mobile
Mobile represents our largest unit volume market and has provided significant growth over the last five years. Use of headsets with
cell phones has grown worldwide, particularly due to continued Bluetooth technology adoption and hands-free legislation for cell
phones. As headsets become more widely used, users are becoming more fashion conscious and style has become as important as
functionality and technology. Our mobile headsets merge technological innovations with style. We believe this market is likely to
grow more slowly in the future than it has in the past as it begins to mature.
Entertainment and Computer Audio
Entertainment and computer audio headsets, whether they are used for interactive on-line gaming or switching between music and
phone calls for multi-functional devices, represent an emerging market opportunity for us.
We believe that a number of fundamental factors are likely to increase our customers’ need for PC-compatible headsets in the future,
including the convergence of telephony and entertainment, internet multimedia applications such as streaming audio and video, VoIP,
gaming, and video conferencing. As devices providing these users’ needs converge, our headsets need to be PC-compatible, cell
phone compatible, MP3 compatible and various combinations of these. We believe our product roadmaps address the convergence
brought about by these needs.
Specialty Products
Our specialty products address the unique needs of various consumer groups, one of which is the increasing number of people
suffering from hearing loss worldwide. Clarity offers a comprehensive range of communications products that serves customers with
mild, moderate, and severe hearing loss as well as the deaf community.
FOREIGN OPERATIONS
In fiscal 2008, 2009 and 2010 net revenues outside the U.S. accounted for approximately 38%, 37%, and 38%, 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 2010, 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, the Great Britain Pound, and the Mexican Peso, which together constitute the most significant portion of our
currency exposure. The Euro and Great Britain Pound have recently declined in value relative to the U.S. dollar; while our existing
hedges cover a certain amount of exposure for our fiscal 2011,further long-term declines in these currencies are likely to have a
material adverse impact on our financial results.
Further information regarding our foreign operations, as required by Item 101(d) of Regulation S-K, can be found in the Consolidated
Financial Statements and related notes herein.
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.
One of our primary competitors is GN Netcom, a subsidiary of GN Store Nord A/S., 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,
Logitech, and Aliph 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, Samsung, and Apple.