Adaptec 2005 Annual Report Download - page 15

Table of Contents
our common technologies and intellectual property across a broad range of networking equipment. Many OEMs recognize they can obtain highly complex,
broadband communications technology from companies such as ours rather than dedicating their own resources to develop custom chips. We intend to take
advantage of our customers’ growing requirements to outsource more of the silicon content in their networking and storage equipment that allows the OEMs to
reduce their development costs and improve time-to-market while differentiating their products in other ways. We constantly look for ways to enable new classes
of services with the introduction of new technologies for our customers and carriers.
SALES, MARKETINGAND DISTRIBUTION
Our sales and marketing strategy is to have our products designed into our customers’ equipment by developing superb products for which we provide premium
service and technical support. Our marketing team is focused on developing new products and solutions that meet the needs of our customers, including original
equipment manufacturers and original design manufacturers. We are often involved in the early stages of design concerning our customers’ plans for new
equipment. This helps us determine if our existing products can be used in their new equipment or if new devices need to be created for the application. To assist
us in our planning process, we are in regular contact with our key customers to discuss industry trends, emerging standards and ways in which we can assist in
their new product requirements.
Our sales and marketing teams actively demonstrate our devices with other industry suppliers and provide technical information to our customers. Technical
support is essential to our customers’ success, and we provide this through field application engineers, technical marketing and systems engineers. We also
provide more detailed information and support for our product line through our corporate website and special customer-accessible extranet sites. We believe that
providing comprehensive product service and support is critical to shortening customers’ design cycles and maintaining a competitive position in the markets that
we serve.
Our sales team is focused on selling and supporting our chips and chipsets for equipment providers who are in turn selling their products to service providers,
enterprises, or consumers. To better match our available sales resources to market opportunities we also focus our sales and support efforts on targeted
customers.
We sell our products to end customers directly and through distributors and independent manufacturers’ representatives. In 2007, approximately 27% of our
orders were shipped through our distributors, approximately 46% were sent by us directly to contract manufacturers selected by OEMs, and the balance were sent
directly to our OEM customers.
In 2007, our largest distributor was Avnet Inc., which represented our products worldwide (excluding Japan, Israel, and Taiwan). We recognize sales through
Avnet on a sell-through basis, which occurs when Avnet ships our products to the end customer. In 2007, total sales shipped through Avnet worldwide were 19%
of total revenues. Our second largest distributor is Macnica Inc. Sales shipped through this distributor in 2007 were approximately 11% of total revenues.
Our sales outside of the United States, based on customer billing location, accounted for 80% of total revenue in 2007, 76% in 2006, and 61% in 2005. Our sales
to customers in Asia, including Japan and China, continued to increase in 2007 (65% of sales) from 2006 (57% of
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Source: PMC SIERRA INC, 10-K, February 22, 2008