8x8 2000 Annual Report Download - page 18

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The main competition includes Lucent, Nortel Networks, VocalData, VocalTec Communications, Inter-tel and several other providers of
traditional and newer generation IP-based solutions. Although each of these companies is in competition with the Company's iPBX product
suite, all today provide solutions based on past-generation integrated solutions, whereas the ATS product suite and hosted iPBX establishes a
new methodology for addressing an existing growth market. Directly competitive products targeted for general release in calendar year 2001
are currently under development at several pre-IPO startup companies, including BroadSoft, Sylantro Systems, IPCell Technologies and
Shoreline Communications.
Principle competitive factors in the market for hosted iPBX solutions include product feature parity, interface design, product reliability, time-
to-market, adherence to standards, price, functionality and IP network delivery/design. The Company believes that the market for iPBX
solutions is currently in the initial adoption phase and that growth of the market will be driven by the ability of iPBX products to meet the
advanced feature requirements of service providers, by the lower costs of IP-based solutions, and by a general trend toward the replacement of
circuit-switched networks with packet switched ones.
We expect our competitors to continue to improve the performance of their current products and introduce new products or new technologies.
If our competitors successfully introduce new products or enhance their existing products, this could reduce the sales or market acceptance of
our products and services, increase price competition or make our products obsolete. To be competitive, we must continue to invest significant
resources in research and development, sales and marketing and customer support. We may not have sufficient resources to make these
investments or to make the technological advances necessary to be competitive, which in turn will cause our business to suffer.
Network Communication Technologies
CUSTOMERS -- The Company markets its OEM semiconductor, system and software products through its own direct sales force as well as
through distributors. The Company sells its Audacity ITP and Audacity-T2 semiconductors to OEMs of VoIP products such as Philips and
CIDCO. In March 2000, the Company announced that is would actively pursue customers to license portions of its semiconductor technology
and to license its VoIP firmware for operation on third party processors. The Company has already licensed portions of its semiconductor
technology and VoIP firmware to STMicroelectronics and to Alcatel Microelectronics. The Company is also selling its Media Hub system
technology through partners such as AG Communications to establish initial market presence.
for the consumer market such as Kyushu Matsushita Electric Co., Ltd., (KME), Samsung, Leadtek Research, Inc., and Truedox Technology
Corporation. The Company is selling its VCP and VCPex semiconductors and related software and reference designs primarily to OEMs of
ISDN office videoconferencing systems including PictureTel Corporation, Sony Electronics, Inc., Ezenia!, VCON Telecommunications Ltd.
and VTEL Corporation.
SALES AND MARKETING -- The Company employs a direct sales force to market its Technologies products that supports domestic and
international sales and operates from the Company's headquarters in Santa Clara, California and a European office in London, England. The
Company's sales and marketing personnel typically provide support to its OEM and distributor customers through sales literature, periodic
training, customer symposia, pre-sales support and joint sales calls. The Company utilizes several marketing programs to support the sale and
distribution of its products, including participation in industry trade shows and conferences. The Company also publishes technical articles,
distributes sales and product literature and has an active public relations plan to encourage coverage of the Company's products and technology
by the media.
COMPETITION -- With regard to its Technologies product line, the Company competes with both manufacturers of digital signal processing
semiconductors and media hub products developed for the growing VoIP marketplace. The Company also competes with manufacturers of
multimedia communication semiconductors, and systems. The markets for the Company's products are characterized by intense competition,
declining average selling prices and rapid technological change.
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