Adobe 2001 Annual Report Download - page 13

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We license our Adobe PostScript software and other printing systems technology to computer and
printer manufacturers, who in turn distribute their products worldwide. We derive a significant portion of
Adobe PostScript royalties from international sales of printers, imagesetters, and other output devices by
our OEMs.
We also license software with post-contract customer support (‘‘PCS’’) for two years. An amount
equal to the fair value of the PCS is deferred and recognized as revenue ratably over the two-year term.
Fair value of the undelivered PCS is determined by the rate charged to customers to renew a two-year PCS
arrangement. PCS includes rights to upgrades, when and if available, a limited period of telephone
support, updates, and bug fixes.
For information regarding our significant customers and geographic areas, please refer to Note 16 of
our Notes to Consolidated Financial Statements.
Order Fulfillment
The procurement of the various components of packaged products, including CDs and printed
materials, and the assembly of packages for retail and other applications products is controlled by Order
Fulfillment operations. We outsource all of our order fulfillment activities to third parties in the United
States, Europe, and Asia.
To date, we have not experienced significant difficulties in obtaining raw materials for the
manufacture of our products or in the replication of CDs, printing, and assembly of components, although
an interruption in production by a supplier could result in a delay in shipment of Adobe’s products. The
backlog of orders as of January 25, 2002 was approximately $15.7 million. The backlog of orders as of
January 26, 2001 was approximately $22.4 million.
Technical Support and Education
For application software, a technical support and services staff responds to customer queries received
by phone, online, or via e-mail. Free technical phone support is provided to customers who are under
warranty for support. For customers in North America and Asia, support is provided up to a maximum of
30 or 90 days beginning upon the customer’s first call or for a maximum of one or two support incidents,
depending on the product. For customers in Europe, support is provided until our release of the second
new full version after the version purchased by the customer. Historically, the majority of support for
European customers is provided within the first 90 days. We have invested in improving self-help and
on-line technical support capabilities so that customers can find answers to their support questions via
Adobe’s Web site and through user-to-user forums where users can help other users with technical
questions. We have also outsourced our initial levels of technical support to provide a consistent standard
for customer support on a worldwide basis. We provide a variety of fee-based options for customers
seeking technical and developer support, beyond the initial free support provided.
We inform customers about our products through on-line informational services on our Web site
(www.adobe.com), and through a growing series of how-to books published by Adobe Press pursuant to a
joint publishing agreement with Peachpit Press. In addition, we develop tests to certify independent
trainers who teach Adobe software classes. We sponsor workshops led by our own graphics design staff,
work with professional associations and user groups, and conduct regular beta-testing programs.
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