Adaptec 2002 Annual Report Download - page 36

Other competitors include major domestic and international semiconductor companies, such as Agilent, Cypress
Semiconductor, Intel, IBM, Infineon, Integrated Device Technology, Maxim Integrated Products, Motorola,
Nortel Networks, and Texas Instruments. These companies are concentrating an increasing amount of their
substantial financial and other resources on the markets in which we participate. This represents a serious
competitive threat to us.
Emerging venture−backed companies also provide significant competition in our segment of the semiconductor
market. These companies tend to focus on specific portions of our broad range of products and in the
aggregate, represent a significant threat to our product lines. In addition, these companies could introduce
disruptive technologies that may make our technologies and products obsolete.
Over the next few years, we expect additional competitors, some of which may also have greater financial and
other resources, to enter the market with new products. These companies, individually or collectively, could
represent future competition for many design wins, and subsequent product sales.
We must often redesign our products to meet evolving industry standards
and customer specifications, which may prevent or delay future revenue
growth.
We sell products to a market whose characteristics include evolving industry standards, product
obsolescence, and new manufacturing and design technologies. Many of the standards and protocols for our
products are based on high−speed networking technologies that have not been widely adopted or ratified by
one or more of the standard−setting bodies in our customers' industry. Our customers often delay or alter
their design demands during this standard−setting process. In response, we must redesign our products to
suit these changing demands. Redesign usually delays the production of our products. Our products may become
obsolete during these delays.
Since many of the products we develop do not reach full production
sales volumes for a number of years, we may incorrectly anticipate
market demand and develop products that achieve little or no market
acceptance.
Our products generally take between 18 and 24 months from initial conceptualization to development of a
viable prototype, and another 6 to 18 months to be designed into our customers' equipment and into
production. Our products often must be redesigned because manufacturing yields on prototypes are
unacceptable or customers redefine their products to meet changing industry standards or customer
specifications. As a result, we develop products many years before volume production and may inaccurately
anticipate our customers' needs.
Our strategy includes broadening our business into the Enterprise, Storage and Consumer markets. We may not
be successful in achieving significant sales in these new markets.
The Enterprise, Storage and Consumer markets are already addressed by incumbent suppliers which have
established relationships with customers. We may be unsuccessful in displacing these suppliers, or having
our products designed into products for different market needs. We may incur increased research, development
and sales costs to address these new markets.
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