Netgear 2008 Annual Report Download - page 6

Table of Contents
deployed in order to share information and resources among users and devices. This information and resource sharing occurs internally, through
a local area network, or externally, via the Internet. To take advantage of complex applications, advanced communication capabilities and rich
multimedia content, users are upgrading their Internet connections by deploying high-speed broadband access technologies. Users also seek the
convenience and flexibility of operating their PCs, laptops and related computing devices and accessing their content in a more mobile, or
wireless, manner. Finally, as the usage of networks, including the Internet, has increased, users have become much more focused on the security
of their connections and the protection of the data within their networks.
Small business and home users demand a complete set of wired and wireless networking and broadband products that are tailored to their
specific needs and budgets and also incorporate the latest networking technologies. These users require the continual introduction of new and
refined products. Small business and home users often lack extensive IT resources and technical knowledge and therefore demand ‘plug-and-
play’ or easy-to-install and use products. These users seek reliable products that require little or no maintenance, and are supported by effective
technical support and customer service. We believe that these users also prefer the convenience of obtaining a networking solution from a single
company with whom they are familiar; as these users expand their networks, they tend to be loyal purchasers of that brand. In addition,
purchasing decisions of users in the small business and home markets are also driven by the affordability of networking products. To provide
reliable, easy-to-use products at an attractive price, we believe a successful supplier must have a company-wide focus on the unique
requirements of these markets and the operational discipline and cost-efficient company infrastructure and processes that allow for efficient
product development, manufacturing and distribution.
Sales Channels
We sell our products through multiple sales channels worldwide, including traditional retailers, online retailers, wholesale distributors,
DMRs, 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, Inc. and Tech Data Corporation. We work directly with our retail channels on
market development activities, such as co-advertising, in-store promotions and demonstrations, instant rebate programs, event sponsorship and
sales associate training, as well as establishing “store within a store” websites and banner advertising.
DMRs and VARs. We primarily sell into the small business market 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 the United States and
internationally, who distribute our products to their small business and home subscribers.
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