8x8 1998 Annual Report Download - page 7

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to have limited access to bandwidth beyond that provided by standard analog POTS lines. The Company believes that significant demand exists
for inexpensive videophone products that would allow users to transmit video images with audio over normal telephone lines.* In addition, the
Company believes that, as higher bandwidth infrastructure, whether ISDN, DSL or cable networks, becomes more available, a market for
inexpensive videophones that operate over such networks will develop.*
As a result of the availability of 33.6 Kbps POTS transmission rates, video compression advances and the adoption of the H.324 standard, low
cost POTS videophones have been developed by the Company and a number of other suppliers. These products may be introduced in a variety
of product configurations and physical forms (i.e., "form factors"), including those based on telephones and using a television for display, such
as the VC105, or using an LCD for display, such as the VC150, and those based on the PC. An increasing number of PCs are being shipped
with pre-installed H.324 compliant software. Significant sales of such H.324 products, if achieved, may increase the usefulness of and demand
for additional H.324 compliant videophones by providing potential videophone purchasers with other parties to call.*
8X8 STRATEGY
Key elements of the Company's strategy include:
- Expand Upon Core Technology. The Company intends to further develop each element of its video communication technology, including
semiconductor, software and systems technology. Certain of the Company's ongoing development efforts are targeted at reducing overall
system costs through integration of additional functions onto the Company's semiconductors.* At the same time, the Company is continuously
developing technology to improve video and audio quality at varying bandwidths, add video communication features and ensure compliance
with all current and emerging video telephony standards to encourage proliferation of the Company's and its OEM customers' system
products.*
- Broaden and Enhance VideoCommunicator Family. The Company is currently selling four models of the ViaTV videophone, all of which
currently operate over POTS and have been introduced since the beginning of 1997. In addition to the introduction of these products, the
Company also has made available software upgrades to its installed base, adding features such as pan/tilt/zoom, snapshot mode, auto-answer
and picture and audio quality enhancements. The Company plans to extend its VideoCommunicator product line in the future by developing
products in new form factors and with new features.* The Company further intends to differentiate its current products in the future by adding
features and providing further picture and audio quality enhancements.*
- Extend Marketing Channels. The Company currently sells its video communication semiconductor and software products to OEMs and
distributors. The Company sells its VideoCommunicators to OEMs, retail stores, distributors and directly to end-users. The Company's
semiconductor and system products are sold in a number of countries throughout North America, Asia and Europe. The Company continues to
work to broaden the marketing and distribution of its products.*
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enable, to varying degrees, video communication over the POTS, ISDN, LAN, DSL and cable networks. The Company's current
VideoCommunicator products operate on the POTS network. The Company intends to further enhance the capabilities to permit operation of
the products of its OEM customers and its VideoCommunicators on additional networks, including those listed above and those that may
emerge in the future.*
* This statement is a forward looking statement reflecting current expectations. There can be no assurance that the Company's actual future
performance will meet the Company's current expectations. See "Manufacturing" commencing on page 10, "Competition" on page 13 and
"Factors That May Affect Future Results" commencing on page 14 for a discussion of certain factors that could affect future performance.
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