8x8 1999 Annual Report Download - page 16

Download and view the complete annual report

Please find page 16 of the 1999 8x8 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 63

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63

- Implementation of Network Communications Protocols. The Company has developed expertise in implementing both physical layer
communications protocols (such as the V.34 modem standard) and low layer network management protocols (such as TCP/IP) as software
modules on its programmable semiconductors. Inclusion of these modules in the Company's application software running on its programmable
semiconductors leads to cost reduction and efficiency improvements in the resulting communication systems products.
System Design
The Company has developed expertise in integrating its semiconductors and software with peripheral components to produce complete digital
telephony and multimedia communication systems. The Company's system technology consists of modular subsystems that can be combined
devices, such as the analog phones in a home. In addition, the Video Monitoring products connect to video input and display devices which
allows video data to be transmitted across various networks. The Company's system design expertise includes design and testing for national
and international regulatory requirements such as consumer safety, public telephone network requirements and electromagnetic emissions.
CUSTOMERS AND MARKETING
The Company markets its OEM semiconductor, system and associated software products through its own direct sales force as well as through
distributors. The Company sells its VCP and VCPex semiconductors and related software and reference designs primarily to OEMs of ISDN
office videoconferencing systems that use the H.320 and H.323 standards, including PictureTel Corporation, Siemens AG, Sony Electronics,
Inc., VideoServer, Inc., VCON Telecommunications Ltd. and VTEL Corporation. The Company sells its LVP semiconductors and related
as Kyushu Matsushita Electric Co., Ltd. (KME), Leadtek Research, Inc., and Truedox Technology Corporation. The Company is selling its
Audacitysemiconductor and Symphony module products to OEMs of broadband network equipment such as manufacturers of carrier-class
gateway systems, cable and DSL modems and PBX manufacturers. To date, the Company has not generated significant revenue from its
Audacity or Symphony products.
The Company markets its RSM-1500 Remote Surveillance Module through its own direct sales force as well as through authorized distributors
and dealers. The Company uses distributors such as ADI and Sprint North Supply to market its products to a wide range of security dealers
who in turn market the product to end-users. Certain large dealers purchase product directly from the Company.
Historically, the Company marketed its ViaTV products through retail channels, catalogs, and distributors. The Company also sold its ViaTV
products through a direct marketing effort utilizing a combination of advertising and toll-free telemarketing in the United States and the United
Kingdom. In conjunction with the Company's distributors and resellers, the ViaTV products have been sold in a number of countries
throughout North America, Europe and Asia. The Company announced in April 1999 that due to the high cost of maintaining a consumer
distribution channel, and the limited growth rate of the consumer videophone market, the Company would cease production of the ViaTV
product line and withdraw from its distribution channels over the subsequent several quarters. There will be a transition period during which
the Company will be marketing its remaining inventory of the products through select channels, both retail and direct. The Company also plans
to seek out OEM opportunities for its consumer videophone technology wherever possible, including licensing and/or private labeling
arrangements.*
* 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 15, "Competition" commencing on
page 13 and "Factors That May Affect Future Results" commencing on page 17 for a discussion of certain factors that could affect future
performance.
12