Netgear 2011 Annual Report Download - page 9

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Table of Contents
Other current and potential competitors include numerous local vendors such as Devolo, LEA and AVM in Europe, Corega and Melco in
Japan and TP-Link in China. Our potential competitors also include other consumer electronics vendors, including LG Electronics, Microsoft,
Panasonic, Samsung, Sony, Toshiba and Vizio, who could integrate networking and streaming capabilities into their line of products, such as
televisions, set top boxes and gaming consoles, and our channel customers who may decide to offer self-branded networking products. We also
face competition from service providers who may bundle a free networking device with their broadband service offering, which would reduce
our sales if we are not the supplier of choice to those service providers. In the service provider space, we are also facing significant and increased
competition from original design manufacturers, or ODM’s, and contract manufacturers who are selling and attempting to sell their products
directly to service providers around the world.
Many of our existing and potential competitors have longer operating histories, greater name recognition and substantially greater
financial, technical, sales, marketing and other resources. As a result, they may have more advanced technology, larger distribution channels,
stronger brand names, better customer service and access to more customers than we do. For example, Hewlett-Packard has significant brand
name recognition and has an advertising presence substantially greater than ours. Similarly, Cisco Systems is well recognized as a leader in
providing networking products to businesses and has substantially greater financial resources than we do. Several of our competitors, such as the
Linksys division of Cisco Systems and D-
Link, offer a range of products that directly compete with most of our product offerings. Several of our
other competitors primarily compete in a more limited manner. For example, Hewlett-Packard sells networking products primarily targeted at
larger businesses or enterprises. However, the competitive environment in which we operate changes rapidly. Other large companies with
significant resources could become direct competitors, either through acquiring a competitor or through internal efforts.
We believe that the principal competitive factors in the consumer, business and service provider markets for networking products include
product breadth, size and scope of the sales channel, brand name, timeliness of new product introductions, product availability, performance,
features, functionality and reliability, price, ease-of-installation, maintenance and use, and customer service and support. We believe our
products are competitive in these markets based on these factors.
To remain competitive, we believe we must invest significant resources in developing new products and enhancing our current products
while continuing to expand our sales channels and maintaining customer satisfaction worldwide.
Research and Development
As of December 31, 2011, we had 224 employees engaged in research and development. We believe that our success depends on our
ability to develop products that meet changing user needs and to anticipate and proactively respond to evolving technology in a timely and cost-
effective manner. Accordingly, we have made investments in our research and development department in order to effectively evaluate new
third-party technologies, develop new in-
house technologies, and develop and test new products. Our research and development employees work
closely with our technology and manufacturing partners to bring our products to market in a timely, high quality and cost-efficient manner.
5
•
within the business markets, companies such as Allied Telesys, Barracuda, Buffalo, Data Robotics, Dell, D
-
Link, Fortinet, Hewlett
-
Packard, Huawei, Cisco Systems, the Linksys division of Cisco Systems, QNAP Systems, Seagate Technology, SonicWALL,
Synology, WatchGuard and Western Digital; and
•
within the service provider markets, companies such as Actiontec, ARRIS, Comtrend, D-Link, Hitron, Huawei, Motorola, Pace,
Sagem, Scientific Atlanta
-
a Cisco company, SMC Networks, TechniColor, Ubee, Compal Broadband, ZTE and ZyXEL .