Adobe 2012 Annual Report Download - page 38

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ITEM 1A. RISK FACTORS
As previously discussed, our actual results could differ materially from our forward-looking statements. Factors that might
cause or contribute to such differences include, but are not limited to, those discussed below. These and many other factors described
in this report could adversely affect our operations, performance and financial condition.
If we cannot continue to develop, market and offer new products and services or upgrades or enhancements to existing products
and services that meet customer requirements, our operating results could suffer.
The process of developing new high technology products and services and enhancing existing products and services is
complex, costly and uncertain; if we fail to anticipate customers’ changing needs and emerging technological trends, our market
share and results of operations could suffer. We must make long-term investments, develop or obtain appropriate intellectual
property and commit significant resources before knowing whether our predictions will accurately reflect customer demand for
our products and services. Our inability to extend our core technologies into new applications and new platforms, including the
market for mobile, tablet and other IP-connected devices (“non-PC devices”), and to anticipate or respond to technological changes
could affect continued market acceptance of our products and services and our ability to develop new products and services.
Additionally, any delay in the development, production, marketing or offering of a new product or service or upgrade or enhancement
to an existing product or service could cause a decline in our revenues, earnings or stock price and could weaken our competitive
position. We maintain strategic relationships with third parties with respect to the distribution of certain of our technologies and
the support of certain product functionality. If we are unsuccessful in establishing or maintaining our strategic relationships with
these third parties, our ability to compete in the marketplace or to grow our revenues would be impaired and our operating results
would suffer.
We offer our PC application-based products primarily on Windows and Macintosh platforms. To the extent that there is a
continued slowdown of customer purchases of personal computers on either the Windows or Macintosh platform or in general,
to the extent that we have difficulty transitioning product or version releases to new Windows and Macintosh operating systems,
or to the extent that significant demand arises for our products or competitive products on other platforms before we choose and
are able to offer our products on these platforms, our business could be harmed. To the extent new releases of operating systems,
including for non-PC devices, or other third-party products, platforms or devices make it more difficult for our products to perform,
and our customers are persuaded to use alternative technologies, our business could be harmed.
Introduction of new products, services and business models by existing and new competitors could harm our competitive position
and results of operations.
The markets for our products and services are characterized by intense competition, evolving industry standards, emerging
business and distribution models, disruptive software and hardware technology developments, frequent new product and service
introductions, including limited functionality alternatives available at lower costs or free of charge, short product and service life
cycles and price sensitivity on the part of consumers, all of which may result in downward pressure on pricing and gross margins
and could adversely affect our renewal and upgrade rates. Our future success will depend on our ability to enhance our existing
products and services, introduce new products and services on a timely and cost-effective basis, meet changing customer needs,
extend our core technology into new applications, and anticipate and respond to emerging standards, business models, software
delivery methods and other technological changes, such as the evolution and emergence of digital application marketplaces as a
direct sales and software delivery environment. These digital application marketplaces often have exclusive distribution for certain
platforms, which may make it more difficult for us to compete in these markets. If any competing products, services, or operating
systems achieve widespread acceptance, our operating results could suffer. In addition, consolidation has occurred among some
of the competitors in the markets in which we compete. Further consolidations in these markets may subject us to increased
competitive pressures and may therefore harm our results of operations.
For additional 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 Annual Report on Form 10-K.
If we fail to successfully manage transitions to new business models and markets, our results of operations could be negatively
impacted.
We plan to release numerous new product and service offerings and employ new software delivery methods in connection
with our diversification into new business models and markets. It is uncertain whether these strategies will prove successful or
whether we will be able to develop the necessary infrastructure and business models more quickly than our competitors. Market
acceptance of these new product and service offerings will be dependent on our ability to (1) include functionality and usability
in such releases that address certain customer requirements with which our operating history is not extensive, and (2) to optimally
price our products in light of marketplace conditions, our costs and consumer demand. Some of these new product and service
offerings could subject us to increased risk of legal liability related to the provision of services as well as cause us to incur significant
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