8x8 2000 Annual Report Download - page 20

Download and view the complete annual report

Please find page 20 of the 2000 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 66

  • 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
  • 64
  • 65
  • 66

The Company's current and future research and development efforts relate primarily to digital and multimedia communication systems and the
components which comprise those systems. Areas of emphasis will include enhanced versions of its advanced telephony system and digital
communication semiconductor architectures intended to provide higher performance, enhanced functionality and further integration of certain
the Company is developing new form factors, network topologies and embedded systems that are designed to comply with new and emerging
IP telephony standards. Future software developments may focus on emerging audio and video telephony standards and protocols, quality and
Solutions and Network Communication Technologies products.
If the Company is unable to develop and introduce new or enhanced products in a timely manner, or if such new or enhanced products do not
achieve sufficient market acceptance, it would have a material adverse effect on the Company's business and operating results.
LICENSING AND DEVELOPMENT ARRANGEMENTS
The Company has entered into licensing and development arrangements with its customers to promote the design, development, manufacture
and sale of the Company's products. In order to encourage the use of its semiconductors, the Company has licensed portions of its systems
technology and software object code for its semiconductors to virtually all of its semiconductor customers. Moreover, many of the Company's
OEM customers have licensed portions of the source code to its software for its semiconductors. The Company intends to continue to license
its semiconductor, software and systems technology to other companies, many of which are current or potential competitors of the Company.
Such arrangements may enable these companies to use the Company's technology to produce products that compete with the Company's IP
telephony and video products.
The Company has also licensed the right to manufacture certain of its multimedia communication semiconductors, subject to payment of
royalties, to several videoconferencing systems manufacturers. In addition, the Company has licensed portions of its multimedia
communication semiconductor technology to ESS Technology. In addition, the Company has licensed portions of its embedded software and
DSP core technology to STMicroelectronics. Of these licensees, ESS Technology and STMicroelectronics may sell semiconductors based on
the licensed technology to third parties, while the other licensees are limited to sale of such semiconductors as part of multimedia
communication systems or sub-systems. The obligation of ESS Technology to pay royalties to the Company with regard to the sale of
semiconductors based on the licensed technology will expire in October 2000.
In the fiscal years ended March 31, 2000, 1999 and 1998, technology licensing revenues (all of which were nonrecurring) were $4.6 million,
$5.5 million and $14.5 million, respectively. There can be no assurance that the Company will receive such licensing revenues in the future.
The Company has in the past licensed and in the future expects to continuing licensing its technology to others, many of whom are located or
may be located abroad. There are no assurances that such licensees will protect the Company's technology from misappropriation.
In addition to licensing its technology to others, the Company from time to time will take a license to others' technology. The Company relies
upon certain technology, including hardware and software, licensed from third parties. The loss of, or inability to maintain, existing licenses
could have a material adverse effect on the Company's business and operating results.
EMPLOYEES
As of March 31, 2000, the Company employed a total of 147 people, including 19 in manufacturing operations, 72 in research and
development, 38 in sales and marketing and 18 in general and administrative capacities. The Company also employs a number of temporary
employees and consultants on a contract basis.
17