NVIDIA 2006 Annual Report Download - page 22

• proper new product definition;
• timely completion and introduction of new product designs;
• the ability of third−party manufacturers to effectively manufacture our new products in a timely manner;
• dependence on third−party subcontractors for assembly, testing and packaging of our products and in meeting product delivery
schedules and maintaining product quality;
• the quality of any new products;
• differentiation of new products from those of our competitors;
• market acceptance of our products and our customers' products; and
• availability of adequate quantity and configurations of various types of memory products.
A critical component of our product development effort is our partnerships with leaders in the computer aided design, or CAD,
industry. We have invested significant resources to develop relationships with industry leaders, including Cadence Design Systems,
Inc. and Synopsys, Inc., often assisting these companies in the product definition of their new products. We believe that forming these
relationships and utilizing next−generation development tools to design, simulate and verify our products will help us remain at the
forefront of the 3D graphics, communications and networking segments and develop products that utilize leading−edge technology on
a rapid basis. We believe this approach assists us in meeting the new design schedules of PC OEMs and other manufacturers. If these
relationships are not successful, we may not be able to develop new products in a timely manner, which could result in a loss of
market share, a decrease in revenue and a negative impact on our operating results. Our failure to successfully develop, introduce or
achieve market acceptance for new processors would harm our business.
Our failure to identify new market or product opportunities or develop new products could harm our business.
As our GPUs or other processors develop and competition increases, we anticipate that product life cycles at the high end will
remain short and average selling prices will decline. In particular, we expect average selling prices and gross margins for our
processors to decline as each product matures and as unit volume increases. As a result, we will need to introduce new products and
enhancements to existing products to maintain or improve overall average selling prices and gross margins. In order for our processors
to achieve high volumes, leading PC OEMs, ODMs, and add−in board and motherboard manufacturers must select our processor for
design into their products, and then successfully complete the designs of their products and sell them. We may be unable to
successfully identify new product opportunities or to develop and bring to market new products in a timely fashion. In addition, we
cannot guarantee that new products we develop will be selected for design into PC OEMs', ODMs', and add−in board and
motherboard manufacturers' products, that any new designs will be successfully completed or that any new products will be sold.
As the complexity of our products and the manufacturing process for our products increases, there is an increasing risk that we
will experience problems with the performance of our products and that there will be delays in the development, introduction or
volume shipment of our products. We may experience difficulties related to the production of current or future products or other
factors that may delay the introduction or volume sale of new products we develop. In addition, we may be unable to successfully
manage the production transition risks with respect to future products. Failure to achieve any of the foregoing with respect to future
products or product enhancements could result in rapidly declining average selling prices, reduced margins and reduced demand for
products or loss of market share. In addition, technologies developed by others may render our processors non−competitive or
obsolete or result in our holding excess inventory, any of which would harm our business.
We could suffer a loss of market share if our products contain significant defects.
Products as complex as those we offer may contain defects or experience failures when introduced or when new versions or
enhancements to existing products are released. We have in the past discovered defects and incompatibilities with customers'
hardware in some of our products and may experience delays or loss of revenue to correct any defects or incompatibilities in the
future. Errors in new products or releases after commencement of
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