3Ware 2005 Annual Report Download - page 44

Our restructuring activities could result in management distractions, operational disruptions and other
difficulties.
In the third quarter of fiscal 2005, we implemented our fifth restructuring plan in the last four years. This
plan involved the closure of our research and development facility in Israel, the elimination of approximately 150
positions and the disposal of certain capital equipment and engineering software tools.
Employees directly affected by this or earlier restructuring plans may seek future employment with our
customers or competitors. Although all employees are required to sign a confidentiality agreement with us at the
time of hire, we cannot assure you that the confidential nature of our proprietary information will be maintained
in the course of such future employment. Our restructuring efforts could divert the attention of our management
away from our operations, harm our reputation and increase our expenses. We cannot assure you that our
restructuring efforts will be successful, or that we may not undertake additional restructuring activities. In
addition, if we continue to reduce our workforce, it may adversely impact our ability to respond rapidly to any
renewed growth opportunities.
Our markets are subject to rapid technological change, so our success depends heavily on our ability to
develop and introduce new products.
The markets for our products are characterized by:
• rapidly changing technologies;
• evolving and competing industry standards;
• long sales cycles;
• short product life cycles;
• changing customer needs;
• emerging competition;
• frequent new product introductions and enhancements;
• increased integration with other functions; and
• rapid product obsolescence.
To develop new products for the communications storage or other technology markets, we must develop,
gain access to and use leading technologies in a cost-effective and timely manner and continue to develop
technical and design expertise. We must have our products designed into our customers’ future products and
maintain close working relationships with key customers in order to develop new products that meet customers’
changing needs. We must respond to changing industry standards, trends towards increased integration and other
technological changes on a timely and cost-effective basis. Our pursuit of technological advances may require
substantial time and expense and may ultimately prove unsuccessful. If we are not successful in introducing such
advances, we will be unable to timely bring to market new products and our revenues will suffer.
Many of our products are based on industry standards that are continually evolving. Our ability to compete
in the future will depend on our ability to identify and ensure compliance with these evolving industry standards.
The emergence of new industry standards could render our products incompatible with products developed by
major systems manufacturers. As a result, we could be required to invest significant time and effort and to incur
significant expense to redesign our products to ensure compliance with relevant standards. If our products are not
in compliance with prevailing industry standards or requirements, we could miss opportunities to achieve crucial
design wins. If we fail to do so, we may not achieve design wins with key customers or may subsequently lose
such design wins, and our business will significantly suffer because once a customer has designed a supplier’s
product into its system, the customer typically is extremely reluctant to change its supply source due to
significant costs associated with qualifying a new supplier.
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