Adobe 2005 Annual Report Download - page 29

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competitors and may therefore harm our results of operations. For information regarding our competition and the
risks arising out of the competitive environment in which we operate, see the section entitled “Competition”
contained in Item 1 of this report.
If we fail to successfully manage transitions to new business models and markets, our results of operations could be
negatively impacted.
We are devoting significant resources to the development of technologies and service offerings where we have a
limited operating history, including the enterprise and government markets and the mobile and device markets. In
the enterprise and government markets, we intend to increase our focus on vertical markets such as education,
financial services, manufacturing, and the architecture, engineering and construction markets. With our Breeze
product line, we intend to increase awareness in targeted horizontal markets such as training and marketing and
vertical markets such as manufacturing, financial services and telecommunications. These new offerings and
markets require a considerable investment of technical, financial and sales resources, and a scaleable organization.
Many of our competitors may have advantages over us due to their larger presence, larger developer network, deeper
experience in the enterprise and government markets and the mobile and device markets, and greater sales and
marketing resources. In the mobile and device markets, our intent is to license our technology to device makers
manufacturers and telecommunications carriers that embed our technology on their platforms, and in the enterprise
and government market our intent is to form strategic alliances with leading enterprise and government solutions
and service providers to provide additional resources to further enable penetration of such markets. If we are unable
to successfully enter into strategic alliances with device maker manufacturers, telecommunication carriers and
leading enterprise and government solutions and service providers, or if they are not as productive as we anticipate,
our market penetration may not proceed as rapidly as we anticipate and our results of operations could be negatively
impacted.
Revenues from our new business segments may be difficult to predict.
As previously discussed, we are devoting significant resources to the development of product and service
offerings where we have a limited operating history. This makes it difficult to predict revenues. For example, we
intend to expand the use of our Mobile and Device Solutions by licensing our products for use in mobile phones, set-
top boxes, game devices, personal digital assistants, hand-held computers and other consumer electronic devices;
however, we have a limited history of licensing products in these markets and may experience a number of factors
that will make our revenue less predictable, including longer than expected sales and implementation cycles,
potential deferral of revenue due to multiple-element revenue arrangements and alternate licensing arrangements.
If we fail to anticipate and develop new products in response to changes in demand for application software,
computers and printers, our business could be harmed.
Any failure to anticipate changing customer requirements and develop and deploy new products in response to
changing market conditions may have a material impact on our results of operations. As previously discussed, we
plan to release numerous new product offerings and upgrade versions of our current products in connection with our
transition to new business models and the acquisition of Macromedia. Market acceptance of our new product or
version releases will be dependent on our ability to include functionality and usability in such releases that address
the requirements of customer demographics with which we have limited prior experience. To the extent we
incorrectly estimate customer requirements for such products and version releases or if there is a delay in market
acceptance of such products and version releases, our business could be harmed.
We offer our Creative Solutions and Knowledge Worker Solutions application-based products primarily on
Windows and Macintosh platforms and on some UNIX platforms. We generally offer our server-based products, but
not desktop application products, on the Linux platform as well as the Windows and UNIX platforms. To the extent
that there is a slowdown of customer purchases of personal computers on either the Windows or Macintosh platform
or in general, or to the extent that significant demand arises for our products or competitive products on the Linux
desktop platform before we choose and are able to offer our products on this platform, our business could be
harmed. Additionally, to the extent that we have difficulty transitioning product or version releases to new Windows
and Macintosh operating systems or to the extent new releases of operating systems or other third party products
make it more difficult for our products to perform, our business could be harmed.