Circuit City 2007 Annual Report Download - page 9

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We provide extensive technical telephone support to our Systemax and Ultra brand PC customers. We maintain a database of commonly asked
questions for our technical support representatives, enabling them to respond quickly to similar questions. We conduct regular on-site training
seminars for our sales representatives to help ensure that they are well trained and informed regarding our latest product offerings.
Suppliers
We purchase the majority of our products and components directly from manufacturers and large wholesale distributors. During 2007 and 2006,
Ingram Micro accounted for 14.4% and 12.8% of our purchases. During 2005, no vendor accounted for more than 10% of our purchases. The
loss of this vendor, or any other key vendors, could have an adverse effect on us.
Certain private label products are manufactured by third-
parties to our specifications. Many of these private label products have been designed or
developed by our in-house product design and development teams.
Competition and Other Market Factors
Technology Products
The North American and European technology product markets are highly competitive, with many U.S., Asian and European companies vying
for market share. There are few barriers of entry, with these products being sold through the direct market channel, mass merchants, over the
internet and by computer and office supply superstores.
Timely introduction of new products or product features are critical elements to remaining competitive. Other competitive factors include
product performance, quality and reliability, technical support and customer service, marketing and distribution and price. Some of our
competitors have stronger brand-recognition, broader product lines and greater financial, marketing, manufacturing and technological resources
than us. Additionally, our results could also be adversely affected should we be unable to maintain our technological and marketing
arrangements with other companies, such as Microsoft®, Intel® and Advanced Micro Devices®.
The North American technology products market is highly fragmented and characterized by multiple channels of distribution including direct
marketers, local and national retail computer stores, computer resellers, mass merchants, computer and office supply “superstores” and internet-
based resellers. In Europe, our major competitors are regional or country-specific retail and direct-mail distribution companies and internet-
based
resellers.
With conditions in the market for technology products remaining highly competitive, continued reductions in retail prices may adversely affect
our revenues and profits. Additionally, we rely in part upon the introduction of new technologies and products by other manufacturers in order to
sustain long-term sales growth and profitability. There is no assurance that the rapid rate of such technological advances and product
development will continue.
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