D-Link 2013 Annual Report Download - page 3

Challenges and Opportunities
In 2013, despite facing a challenging business environment,
D-Link made several key achievements. D-Link Cloud Camera
shipments grew by 36.3% over 2012, gaining number one
market share in the United States and Europe. The number of
mydlink™ Cloud Services Global registered users exceeded one
million, and D-Link led the way as the rst mover in the new,
faster 802.11ac routers.
There were still challenges. New competitors from China
entered the market such as XiaoMi, Tencent, and Alibaba. The
maturity of the Internet equipment market also intensified
price competition, and the general macro economy was
uncertain, all of which had an eect on D-Link’s performance.
Conditions mildly improved in the U.S and Europe during
the second half of 2013, and slow but stable growth in China
pulled the global economy up. With elections to be held in
India and Brazil, and Russia’s economy going into a recession
following anti-government protests in Ukraine, D-Link is
keeping a hopeful yet modest forecast for 2014.
Financial Performance
In 2013, D-Link’s global consolidated revenue totaled NT$30.6
billion. Operating income was NT$398.3 million. Net income
was NT$647.6million, compared to the previous year's NT$779
million. A combined gross margin of 26.4% was seen in 2013,
taking into account inventory provisional loss, which was
slightly lower than the 26.8% in 2012. Operating prot margin
dropped to 1.3% from 2.1% last year. Annual earnings per share
were NT$1.06, versus the previous year’s NT$1.23. Substandard
overall operating performance in 2013 was due mainly to
global economic stagnancy and excessive price competition.
Market Share
According to technology research and advisory firm
Gartner1, in 2013, D-Link ranked first in the Enterprise WLAN
market based on standalone access points (764,000 units),
with a worldwide market share of 45.7%. In the Enterprise
Ethernet Switch market, D-Link ranked third based on total
port shipments (61.6 million ports), for a worldwide market
share of 15.3%. Additionally, broadband products achieved
annual shipments of 20.1 million units, and digital home
products achieved annual shipments of 2.9 million units. Based
on revenue share by product category2, wireless products
accounted for 34% of annual turnover, followed by 28% for
switches, 18% for broadband devices, and 20% for digital home
and others.
A Strategy to Win in the Cloud Era
D-Link has defined areas of strategic focus to compete in the
Cloud Era. In the consumer market, the rst of these areas is Cloud
Cameras. D-Link’s IP cameras have risen to prominence in the
fast-growing IP surveillance market. The unique mydlink platform
features Zero Configuration setup that has helped differentiate
the line of IP cameras, making them an industry favorite. Another
strategic area is the portable router, an indispensable tool
for users who need reliable and fast connectivity on the go.
D-Link became a first mover in next- generation Wireless 11AC
technology, which provides the bandwidth required by users
carrying more mobile devices with larger screens and with higher
data needs. Being rst to market with this the new technology, it’s
no accident that D-Link has become the number one worldwide
provider for 11ac connectivity in the consumer market.
The BYOD (Bring Your Own Device) trend is driving network
infrastructure upgrades, transforming the SMB and enterprise
markets dramatically. D-Link’s unified wireless solutions benefit
the BYOB trend with features that provide flexibility, scalability,
and offer powerful tools for deployment and management.
Meanwhile, SMBs have started upgrading to smart switches
from managed switches, enabling them to streamline IT
operations and cut costs. These next generation smart switches
greatly reduce complexity while oering superior management
tools and language support. Another area of strategic focus is
D-Link’s 4S package surveillance solutions, a line of devices that
work together by combining Surveillance, Switches, Storage
and Software as a ready-to-deploy solution. In 2013, these
competitive advantages have beaten competitors and seized
market opportunities worldwide.
mydlink Cloud Services
In 2013, the mydlink Cloud service gave users the features that
they want – real-time monitoring, remote management, mobile
access, media streaming, and le sharing – enhancements that
fueled user base growth. That year, mydlink Cloud Services
reached 1 million users; a testament to the evolution of the
mobile app and the move towards the Internet of Things.
D-Link’s Cloud Router, Cloud Camera, and Cloud Storage lines
saw the launch of new models. New Cloud Access Points were
introduced, bringing the benefits of D-Link’s exclusive Cloud
Services to a wider market. mydlink Cloud Services offer a
signicant competitive advantage to D-Link, and as mobile and
social trends mature, the company is already helping customers
connect to more. D-Link’s Cloud Router, Cloud Camera, and
Cloud Storage lines all saw the launch of new models. New
Cloud Access Points were introduced, bringing the benefits of
D-Link’s exclusive Cloud Services to a wider market.
Innovation Today and Tomorrow
In 2013, D-Link won several prestigious design awards, including
two Red Dot Design Awards, a Good Design award, and three
Taiwan Excellence Awards. The DMG-304P HomePlugAV
PowerLine Wi-Fi Network Adapter and the DWR-730 Portable
HSPA+ Mobile Router both received the Red Dot award for
product design. The D-Link 4G Smart Router and the Wi-Vie
Share Cam took home Red Dot Design Concept awards, and
the DAP-1320 Wireless Range Extender took home a Good
Design award. The DIR-505L SharePort™ Mobile Companion was
honored with a Taiwan Excellence Gold award, and the DCS-
6010L 360-Degree Network Camera and DCS-2310L Outdoor HD
PoE Day/Night Network Cloud Camera both took home Taiwan
Excellence Silver awards.
Elsewhere, D-Link unveiled a new and highly intuitive router GUI.
The new GUI complements the Zero Configuration capability,
which has been a major dierentiator of D-Link Cloud Cameras
(and soon, other mydlink-enabled devices). D-Link also led the
way in IPv6 adoption with more than 31 CPE devices certified
in 2012, and added 50 more devices to the list in 2013, proving
that innovation is thriving at D-Link.
Global Service, Local Touch
D-Link has offices in 67 countries around the world, making
the brand widely recognized as a formidable multinational
enterprise. In addition to our established leadership in Europe
and the United States, D-Link is expanding aggressively in
emerging markets such as Latin America, India, Russia, and the
Middle East. Unfavorable economic conditions have slowed
growth in developed markets, making emerging markets even
more important to the company’s success, accounting for
62.5% of consolidated revenue in 2013. D-Link’s global presence
makes it highly responsive to local customer needs by focusing
resources in developing localized applications, giving D-Link a
critical advantage across markets and product segments.
Outlook
New mobile technologies are presenting exciting opportunities
for D-Link in 2014. In the consumer segment, the widespread
adoption of 4G LTE technology is making D-Link’s portable
routers indispensable travel companions. Home automation is a
new front where D-Link will compete. A complete line of smart
plugs, motion sensor controllers and other Connected Home
that can be controlled from mobile devices from anywhere with
an Internet connection will be released. 802.11ac Wi-Fi continues
to make traction as the standard in Wi-Fi connectivity where
D-Link has already gained a strong foothold.
Letter to Shareholders, Customers,
Partners, and Employees
D-Link has made headlines after becoming the worldwide leader
in the consumer router market and IP cameras. In 2014, D-Link
will focus on launching a varied product mix focusing less on low
margin routers and other traditional network equipment. To keep
up with the trends like IoT (Internet of things) for the smart city
and home, D-Link will integrate hardware and software services
with the mydlink platform to give customers new ways to use
traditional appliances and devices.
In the business sector, D-Link’s primary focus will be in solutions
for small to medium businesses, targeting three strategic areas:
unified wireless solutions, smart switches, and integrated one-
stop surveillance solutions. D-Link’s offerings for the business
market include Indoor Unified AP, Outdoor Unified AP, Unified
Switch, and Unied Controller models. D-Link’s smart switches are
making it easier for businesses to manage their network without
headaches. D-Link Green technology is further boosting the
smart switch market as businesses look to reduce their carbon
footprint. The 4S integrated, one-stop surveillance solution is
another key product offering, providing a total surveillance
solution that integrates cameras for increased functional benets.
D-Link IP cameras with 802.11ac connectivity and mydlink cloud
technology give users speed, convenience, and functionality.
With more devices securing IPv6 adoption, businesses owners
and network administrators will have peace of mind knowing
their devices will still be compatible as the Internet keeps
changing.
Finally, in the Broadband sector, carriers and service providers are
increasingly provisioning Wi-Fi networks for home-based data
ooad and business hotspots as part of their mobile broadband
strategy, with this trend being a key growth driver for D-Link’s
telecom business. Service providers also face competitive
pressure to develop new revenue streams from their existing
customer base and their relationships with content owners by
oering higher bandwidth and additional services.
As D-Link pursues these opportunities in 2014, we wish to thank
our shareholders for their long-term confidence in our vision,
and also extend our gratitude to the management team and
our valued sta worldwide, who continue to uphold the spirit of
sound management, sustainable development, and corporate
social responsibility. Through our concerted efforts, D-Link will
meet its performance targets, achieving continued growth and
prosperity.
Chairman & CEO President
ROGER KAO A.P. CHEN
1 Source: Gartner, Market Share: Enterprise Network Equipment by Market Segment,
Worldwide, 4Q13 and 2013.
2 Source: D-Link 2013 nancial report
Chairman & CEO
ROGER KAO A.P. CHEN
President
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