Symantec 2003 Annual Report Download - page 28

26 Symantec 2003
products. In addition, vendors of other operating systems, such as Red
Hat® Linux, Solaris and Unix-based operating systems, may also incorpo-
rate some of the advanced utilities or other functionality offered in our
products. While we plan to continue to improve our products with a view
toward providing enhanced functionality over that provided in current
and future operating systems, these efforts may be unsuccessful and
any improved products may not be commercially accepted by users. We
will also continue to attempt to cooperate with operating system ven-
dors to make our products compatible with those operating systems,
while at the same time, differentiating our utility products from features
included in those operating systems. Our efforts in this regard may be
unsuccessful.
The demand for some of our products, including those currently under
development, may decrease if, among other reasons:
•Microsoft includes additional product features in future releases of
Windows;
•hardware vendors, including Cisco, incorporate additional server-
based network management and security tools into network operat-
ing systems; or
•Microsoft, network equipment or computer hardware manufacturers
license products from our competitors for inclusion in their operating
systems or products or develop or acquire technology or products
that provide functionality directly competitive with our product and
service offerings.
In addition, we compete with other computer software companies, oper-
ating system providers and network equipment and computer hardware
manufacturers for access to retail distribution channels and for the
attention of customers at the retail level and in corporate accounts.
We also compete with other software companies, operating system
providers and network equipment and computer hardware manufactur-
ers to acquire products or companies and to publish software developed
by third parties.
Some of our existing and potential competitors have greater financial,
marketing or technological resources than we do. We believe that
competition in the industry will continue to intensify as other major
software companies expand their product lines into additional product
categories, and as operating system providers and network equipment
and computer hardware manufacturers attempt to leverage their
strengths at the computing platform, security layer and network tier
to compete more aggressively in the market for security solutions.
Manufacturing
Our product development groups produce a set of master CD-ROMs or
diskettes and documentation for each product that are then duplicated
or replicated and packaged into products by our logistics organization.
Purchasing of all raw materials is done by Symantec personnel in our
Cupertino, California and Dublin, Ireland facilities for products manufac-
tured in those areas. All of our domestic manufacturing and order fulfill-
ment is performed by an outside contractor under the supervision of our
domestic logistics organization. The manufacturing steps that are sub-
contracted to outside organizations include the replication of CD-ROMs,
printing of documentation materials and retail boxes, and assembly of
the final packages. For most products distributed outside of North and
South America, our Dublin, Ireland manufacturing facility performs
diskette duplication, assembly of the final packages, and order fulfill-
ment. Our Dublin, Ireland manufacturing facility also subcontracts to
outside organizations for the replication of CD-ROMs and printing of
documentation materials and retail boxes.
Intellectual Property
We regard our software as proprietary. We attempt to protect our
software technology by relying on a combination of copyright, patent,
trade secret and trademark laws, restrictions on disclosure and other
methods. In particular, we have a substantial number of registered
trademarks and currently hold a substantial number of patents in the
United States, as well as patent holdings in other countries, that expire
at various times over the next twenty years. We have also filed several
other applications for patents and trademarks in order to protect
proprietary intellectual property that we believe are important to our
business. We also license some intellectual property from third parties
for use in our products.
We face a number of risks relating to our intellectual property, including
unauthorized use and unauthorized copying or “piracy” of our software
solutions. Litigation may be necessary to enforce our intellectual prop-
erty rights, to protect trade secrets or trademarks or to determine the
validity and scope of the proprietary rights of others. Patents that have
been issued to us could be determined to be invalid and may not be
enforceable against competitive products in every jurisdiction. Further-
more, other parties have asserted and may, in the future, assert infringe-
ment claims against us. These claims and any litigation may result in
invalidation of our proprietary rights. Litigation, even if not meritorious,
could result in substantial costs and diversion of resources and manage-
ment attention. In addition, third party licenses may not continue to be
available to us on commercially acceptable terms, or at all.