8x8 2015 Annual Report Download - page 21

We may incur significant costs to meet the guarantees under our service level agreements, and our failure to meet these guarantees
could result in a loss of customers and expected revenue.
Our standard service level agreement guarantees levels of service availability and voice quality for calls transmitted over the public Internet that
are among the most stringent standards in our industry. Our SLAs typically provide guarantees of more than 99.99% uptime and a mean opinion
score of at least 3.0 for at least 98% of all calls carried over the network. Our SLAs further require rapid response times in order to resolve
issues. We may incur significant network support and maintenance costs in order to meet these guarantees.
We have in the past and may in the future experience network failures, software bugs or other problems that interrupt service or impair call
quality. If these problems are severe enough in duration or frequency, we may breach our service level guarantees under our SLAs, as a result of
which our customers could be entitled to credits against future amounts due under contract, early termination rights or other remedies against us.
If a sufficient number of customers exercise these remedies, the resulting reduction in revenue could have a material adverse effect on our results
of operations.
We depend on third-party vendors for IP phones and software endpoints, and any delay or interruption in supply by these vendors
would result in delayed or reduced shipments to our customers and may harm our business.
We rely on third-party vendors for IP phones and software endpoints required to utilize our service. We currently do not have long-term supply
contracts with any of these vendors. As a result, most of these third-party vendors are not obligated to provide products or services to us for any
specific period, in any specific quantities or at any specific price, except as may be provided in a particular purchase order. The inability of these
third-
party vendors to deliver IP phones of acceptable quality and in a timely manner, particularly the sole source vendors, could adversely affect
our operating results or cause them to fluctuate more than anticipated. Additionally, some of our products may require specialized or high-
performance component parts that may not be available in quantities or in time frames that meet our requirements.
If we do not or cannot maintain the compatibility of our communications and collaboration software with third-party applications and
mobile platforms that our customers use in their businesses, our revenue will decline.
The functionality and popularity of our communications and collaboration services depends, in part, on our ability to integrate our services with
third-party applications and platforms, including enterprise resource planning, customer relations management, human capital management and
other proprietary application suites. Third-party providers of applications and application programmable interfaces, or APIs, may change the
features of their applications and platforms, restrict our access to their applications and platforms or alter the terms governing use of their
applications and APIs and access to those applications and platforms in an adverse manner. Such changes could functionally limit or terminate
our ability to use these third-party applications and platforms in conjunction with our services, which could negatively impact our offerings and
harm our business. If we fail to integrate our software with new third-party back-end enterprise applications and platforms used by our
customers, we may not be able to offer the functionality that our customers need, which would negatively impact our ability to generate revenue
and adversely impact our business.
Our services also allow our customers to use and manage our cloud communications and collaboration services on smartphones, tablets and other
mobile devices. As new smart devices and operating systems are released, we may encounter difficulties supporting these devices and services,
and we may need to devote significant resources to the creation, support, and maintenance of our mobile applications. In addition, if we
experience difficulties in the future integrating our mobile applications into smartphones, tablets or other mobile devices or if problems arise
with our relationships with providers of mobile operating systems, such as those of Apple Inc. or Google Inc., our future growth and our results
of operations could suffer.
If our software fails due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose
customers, become subject to service performance or warranty claims or incur significant costs.
Our customers use our service to manage important aspects of their businesses, and any errors, defects, disruptions to our service or other
performance problems with our service could hurt our reputation and may damage our customers' businesses. Our services and the systems
infrastructure underlying our communications and collaboration platform incorporate software that is highly technical and complex. Our
software has contained, and may now or in the future contain, undetected errors, bugs, or vulnerabilities. Some errors in our software code may
only be discovered after the code has been released. Any errors, bugs, or vulnerabilities discovered in our code after release could result in
damage to our reputation, loss of users, loss of revenue, or liability for damages, any of which could adversely affect our business and financial
results. We implement bug
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