8x8 1999 Annual Report Download - page 18

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competition, declining average selling price and rapid technology change. In addition, the presence of the Company in the VoIP systems
business may result in certain customers or potential customers perceiving the Company as a competitor or potential competitor, which may be
used by other semiconductor manufacturers to their advantage.
Video Monitoring and ViaTV Products
The competitive factors in the market for the Company's RSM-1500 and ViaTV products include audio and video quality, acceptable phone
line transmission rates, ability to connect and maintain stable connections, ease of use, price, access to enabling technologies, product design,
time-to-market, adherence to industry standards, interoperability, strength of distribution channels, customer support, reliability and brand
name. The Company expects intense competition for its RSM-1500 module and faces ongoing competition for its ViaTV products as it exits
that product area. Competition is expected from:
- Large security equipment manufacturers. The Company may face intense competition for its Video Monitoring products from many well
known, established suppliers of security equipment, such as Pelco, and Ultrek Electronics Limited who have continually reduced the cost of
their products and may enter the market for lower cost video communication products.
- Personal computer system and software manufacturers. Potential customers for the Company's RSM-1500 and ViaTV products may elect
instead to buy PCs pre-equipped with video communication software capabilities or a third-party software application for use on a PC. As a
result, the Company faces or may face competition from Intel, and PC software suppliers such as Microsoft, Netscape, Javelin and Prism.
ADVIS, InnoMedia PTE Ltd., C-Phone Corporation, Leadtek Research, Inc., Truedox Technology Corporation and Video Communication
Systems GmbH are among the companies selling low cost videophones, some targeted specifically at the video monitoring marketplace. Other
that compete with the RSM-1500 and ViaTV products in the future. * Certain manufacturers or potential manufacturers of low cost
videophones have licensed or purchased, or may license or purchase, the Company's technology and semiconductors in order to do so. KME
and 3Com in particular have licensed substantially all of the technology underlying the ViaTV, and may use such technology to introduce
products that compete with the RSM-1500 or ViaTV products. Each of Leadtek Research, Inc. and Truedox Technology Corporation license
the Company's technology and purchase the Company's Videoconferencing semiconductors. The Company aggressively licenses its
semiconductor, software and systems technology and sells its semiconductor and system products to third parties. Thus, it is likely that
additional of the Company's OEM customers will become competitors with respect to the Company's RSM-1500 or ViaTV products business.
Other competitors may purchase multimedia communication semiconductors and related technology from other suppliers.
The Company's reliance on developing vertically integrated technology, comprising systems, circuit boards, software and semiconductors,
places a significant strain on the Company and its research and development resources. Competitors that focus on one aspect of technology,
such as systems or semiconductors, may have a considerable advantage over the Company. In addition, many of the Company's current and
potential competitors have longer operating histories, are substantially larger, and have greater financial, manufacturing, marketing, technical
and other resources. Many also have greater name recognition and a larger installed base of products than the Company. Competition in the
Company's markets may result in significant price reductions. As a result of their greater resources, many current and potential competitors
may
* 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.
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