Plantronics 2006 Annual Report Download - page 35

part i
) FORECASTING , PLANNING AND SUPPLY CHAIN LOGISTICS . With the growth of our product
portfolio, we also experience increased complexity in forecasting customer demand and in
planning for production, and transportation and logistics management. If we are unable to scale
and improve our forecasting, planning and logistics management, we could frustrate our
customers, lose product sales or accumulate excess inventory.
) SUPPORT PROCESSES . To manage the growth of our operations, we will need to continue to
improve our transaction processing, operational and financial systems, and procedures and
controls to effectively manage the increased complexity. If we are unable to scale and improve
these areas, the consequences could include: delays in shipment of product, degradation in levels
of customer support, lost sales, decreased cash flows, and increased inventory. These difficulties
could harm or limit our ability to expand.
We have strong competitors and expect to face additional competition in the future. If we are unable
to compete effectively, our results of operations may be adversely affected.
Certain of our markets are intensely competitive. They are characterized by a trend of declining average
selling prices, continual performance enhancements and new features, as well as rapid adoption of
technological and product advancements by competitors in our retail market. Also, aggressive industry
pricing practices have resulted in downward pressure on margins from both our primary competitors as
well as from less established brands.
Competitors in audio devices vary by product line. In the PC speaker business, competitors include
Logitech and Creative Labs. In the PC and office and contact center markets, a significant competitor is
Senheiser Communications. In the PC and console headset, telephony and microphone business, our
primary competitor is Logitech. In the Audio Entertainment speaker business, competitors include
Harmon Kardon, Bose, Logitech, Cyber Acoustics and Creative Labs. Since our entry into the mobile
phone headset business, we have been competing against mobile phone and accessory companies such as
Jabra, Motorola, Nokia, and Sony-Ericsson, some of whom have substantially greater resources than we
have, and each of whom has established market positions in this business. Currently, our single largest
competitor is GN Netcom, a subsidiary of GN Great Nordic Ltd., a Danish telecommunications
conglomerate. We are currently experiencing more price competition from GN Netcom in the B2B
markets than in the past. Motorola is a significant competitor in the consumer headset market, primarily
in the mobile Bluetooth market, and has a brand name that is very well known and supported with
significant marketing investments. Motorola also benefits from the ability to bundle other offerings with
their headsets. We are also experiencing additional competition from other consumer electronics
companies that currently manufacture and sell mobile phones or computer peripheral equipment. These
competitors generally are larger, offer broader product lines, bundle or integrate with other products
communications headset tops and bases manufactured by them or others, offer products containing bases
that are incompatible with our headset tops and have substantially greater financial, marketing and other
resources than we do.
Our product markets are intensely competitive and market leadership changes frequently as a result of
new products, designs and pricing. We also expect to face additional competition from companies,
principally located in the Far East, which offer very low cost headset products, including products that
are modeled on, or are direct copies of our products. These new competitors are likely to offer very low
cost products, which may result in pricing pressure in the market. If market prices are substantially
reduced by such new entrants into the headset market, our business, financial condition or results of
operations could be materially adversely affected.
Further, we expect to continue to experience increased competitive pressures in our retail business,
particularly in the terms and conditions that our competitors offer to our customers, which may be more
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