Symantec 2013 Annual Report Download - page 113

as replacing the need for more effective, full featured products and services such as those that we provide. The
expansion of these competitive trends could have a significant negative impact on our sales and financial results
by causing, among other things, price reductions of our products, reduced profitability and loss of market share.
Many of our competitors have greater financial, technical, sales, marketing, or other resources than we do
and consequently may have the ability to influence customers to purchase their products instead of ours. Further
consolidation within our industry or other changes in the competitive environment, such as Intel Corporation’s
acquisition of McAfee, could result in larger competitors that compete with us on several levels. We also face
competition from many smaller companies that specialize in particular segments of the markets in which we
compete.
Our business models present execution and competitive risks.
In recent years, our SaaS offerings have become increasingly critical in our business. Our competitors are
rapidly developing and deploying SaaS offerings for consumers and business customers. Pricing and delivery
models are evolving. Devices and form factors influence how users access services in the cloud. We are devoting
significant resources to develop and deploy our own SaaS strategies. We cannot assure you that our investments
in and development of SaaS offerings will achieve the expected returns for us or that we will be able to compete
successfully in the marketplace. In addition to software development costs, we are incurring costs to build and
maintain infrastructure to support SaaS offerings. These costs may reduce the operating margins we have
previously achieved. Whether we are successful in this business model depends on our execution in a number of
areas, including:
• Continuing to innovate and bring to market compelling cloud-based experiences that generate
increasing traffic and market share; and
• Ensuring that our SaaS offerings meet the reliability expectations of our customers and maintain the
security of their data.
Our increasing focus on the delivery of products in an appliance form factor creates new business and
financial risks.
Since fiscal 2012, shipments of products to customers in an appliance form factor have represented an
increasingly larger part of our revenues, and we expect this trend to continue. The delivery of solutions in the
form of appliances creates new business and financial risks, including the following:
• increased cost of components and contract manufacturing, as we do not own our manufacturing
facilities;
• supply chain issues, including financial problems of contract manufacturers or component suppliers;
• a shortage of adequate component supply or manufacturing capacity that increases our costs and/or
causes a delay in order fulfillment;
• excess inventory levels, which could lead to write-downs or obsolescence charges;
• additional reserves for product returns;
• challenges in managing our channel business;
• tax and trade compliance complications; and
• local field support of customers’ appliances.
We cannot assure you that we will continue to have success in our appliance business.
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