Epson 2013 Annual Report Download - page 14

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13
Risks Related to Epson’s Business Operations
At present, Epson has identified the following significant factors as risks that could have a material adverse
affect on its future business, financial condition or operating results and that should thus be taken into
account by investors. There may be other risk factors of which Epson is unaware at this time.
Epson strives to recognize, prevent, and control potential risks and to address risks that materialize.
Also, all forward-looking statements hereunder were made at Epson's discretion as of the date this Annual
Report was submitted.
1. Epson relies to a significant degree on profits from its printer business.
Epson’s ¥688,029 million in sales from its information-related equipment business for the year ended
March 2013 constituted about 80% of Epson’s consolidated sales, which were ¥851,297 million. Inkjet
and other printers, including printer consumables, accounted for a large majority of the sales and profits of
this business. A decrease in sales of printers and printer consumables could have a material adverse effect
on Epson’s operating results.
2. Competition and other factors could put downward pressure on prices.
Market prices for Epson’s core printers and projectors and for certain electronic devices might continue to
decline primarily due to intensified competition and a shift in demand toward lower-priced products.
Epson is striving to improve profitability by reducing production costs by using low-cost designs. At the
same time, it is taking measures to fight declining prices by, for example, developing and expanding sales
of high-value-added products.
However, there is no assurance that these efforts will succeed, and if Epson is unable to respond effectively
to counteract downward prices, its operating results might be adversely affected.
3. Epson’s technologies compete with the technologies of other companies.
Some of the products that Epson sells contain technology that place Epson in competition against other
companies. For example:
1) The Micro Piezo*1 technology that Epson uses in its inkjet printers competes with the thermal*2
inkjet technologies of other companies;
2) The 3LCD*3 technology that Epson uses in its projectors competes with other companies’ DLP*4
technologies.
Epson believes the technology it uses in these types of product is superior to the alternative technologies
of other companies, but, if consumer opinion with respect to Epson’s technology changes, or if other
revolutionary technologies appear on the market and compete with Epson’s technologies, Epson may lose
that competitive edge which could adversely affect its operating results.
*1. Micro Piezo technology is an inkjet technology created by Epson that manipulates piezoelectric elements to fire
small droplets of ink from nozzles.
*2. Thermal inkjet technology (also known as bubble-jet technology) is a printer technology in which the ink is
heated to create bubbles and the pressure from the bubbles is used to fire the ink.
*3. 3LCD technology uses high-temperature polysilicon TFT liquid-crystal panels as light valves. The light from the
light source is divided into the three primary colors (red, blue and green) using special mirrors, the picture is
created on separate LCDs for each color, and then the picture is recombined and projected on the screen.
*4. DLP technology uses a digital micro-mirror device (DMD) as a display device. A DMD is a semiconductor on
which a large number of micro mirrors are arranged, each mirror directing light onto its own individual pixel. An
image is formed by the light from the light source being reflected from the mirrors onto the screen. DLP and
DMD are registered trademarks of Texas Instruments Incorporated.
4. Epson genuine consumables might lose market share.
Ink cartridges are particularly important inkjet consumables in terms of Epson’s sales and profit. There are
other parties who supply ink cartridges that can be used in Epson printers. These alternative products are
sold for less than genuine Epson ink cartridges and have a higher market share in emerging markets than in
developed economies.
To counteract the loss in market share of genuine ink cartridges, Epson will pursue a policy of realizing