Netgear 2004 Annual Report Download - page 7

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Table of Contents
interface and simple point and click operations. Our home product offerings include wall-plug data transmission modes which allow
home users to take advantage of their existing electrical wiring infrastructure for transmitting data among network components.
Sales Channels
We sell our products through multiple sales channels worldwide, including traditional retailers, online retailers, wholesale distributors,
direct marketing resellers, or DMRs, value added resellers, or VARs, and broadband service providers.
Retailers.
Our retail channel primarily supplies products that are sold into the home market. We sell directly to, or enter into
consignment arrangements with, a number of our traditional retailers. The remaining traditional retailers, as well as our online retailers,
are fulfilled through wholesale distributors, the largest of which are Ingram Micro and Tech Data. We work directly with our retail
channels on market development activities, such as co-advertising, in-store promotions and demonstrations, event sponsorship and
sales associate training, as well as establishing “store within a store” websites and banner advertising.
DMRs and VARs.
We primarily sell our small business products through an extensive network of DMRs and VARs. Our DMRs include
companies such as CDW and Insight. VARs include our network of registered Powershift Partners, or resellers who achieve prescribed
quarterly sales goals and as a result may receive sales incentives, marketing support and other program benefits from us. Our products
are also resold by a large number of smaller VARs whose sales are not large enough to qualify them for our Powershift Partner
program. Our DMRs and VARs generally purchase our products through our wholesale distributors, primarily Ingram Micro and Tech
Data.
Broadband Service Providers.
We also supply our products directly to broadband service providers in North America and
internationally, who distribute our products to their subscribers.
We derive a substantial portion of our net revenue from international sales. International sales as a percentage of net revenue grew
from 37% in 2002 to 42% in 2003 and 46% in 2004. Sales in Europe, Middle East and Africa, or EMEA, grew from $99.4million in 2003 to
$144.6million in 2004, representing an increase of approximately 45% during that period. We continue to penetrate growing markets
such as China, Italy, Japan, Spain and Sweden. The table below sets forth our net revenue by major geographic region.
Year Ended December31,
Percentage
Percentage
2002
Change
2003
Change
2004
(In thousands)
North America
$
150,096
15
%
$
172,885
19
%
$
205,587
EMEA
68,006
46
%
99,422
45
%
144,590
Asia Pacific and rest of world
19,229
40
%
26,995
22
%
32,962
Total
$
237,331
26
%
$
299,302
28
%
$
383,139
We generally earn revenue upon the first sale of our products and earn no additional revenue upon the subsequent resale, if
applicable, of our products, except to some US retailers to which we have consignment sales arrangements. Revenues from significant
customers as a percentage of our total revenues for the years ended December31, 2002, 2003 and 2004 were as follows:
December31,
Customer
2002
2003
2004
Ingram Micro, Inc.
32
%
31
%
27
%
2005. EDGAR Online, Inc.