Plantronics 2008 Annual Report Download - page 24

18
Reductions in demand for iPod products, which are produced by Apple, Inc., may reduce demand for certain of our Docking Audio
products.
Certain of our Docking Audio products marketed under our Altec Lansing brand were developed for use with Apple, Inc.’s (“Apple”)
iPod products. We have a non-exclusive right to use the Apple interface with certain of our Docking Audio products, and we are
required to pay Apple a royalty for this right. The risks faced in conjunction with our Apple related products include, among others:
xif supply or demand for iPod products decreases, demand for certain of our Docking Audio products could be negatively
affected;
xif Apple does not renew or cancels our licensing agreement, our products may not be compatible with iPods, resulting in
loss of revenues and excess inventories which would negatively impact our financial results;
xif Apple changes its iPod product design more frequently than we update certain of our Docking Audio products, certain
of our products may not be compatible with the changed design. Moreover, if Apple makes style changes to its products
more frequently than we update certain of our Docking Audio products, consumers may not like the look of our products
with the iPod. Both of these factors could result in decreased demand for our products and excess inventories could
result which would negatively impact our financial results;
xApple has introduced its own line of iPod speaker products, which compete with certain of our Altec Lansing branded
speaker products. As the manufacturer of the iPod, Apple has unique advantages with regard to product changes or
introductions that we do not possess, which could negatively impact our ability to compete effectively against Apple’s
speaker products. Moreover, certain consumers may prefer to buy Apple’s iPod speakers rather than other vendors’
speakers because Apple is the manufacturer. As a result, this could lead to decreased demand for our products and
excess inventories could result which would negatively impact our financial results;
xSimilar risks exist for MP3 players manufactured by companies other than Apple.
We sell our products through various channels of distribution that can be volatile and failure to establish successful relationships
with our channel partners could materially adversely affect our business, financial condition or results of operations.
We sell substantially all of our products through distributors, retailers, OEMs and telephony service providers. Our existing
relationships with these parties are not exclusive and can be terminated by either party without cause. Our channel partners also sell or
can potentially sell products offered by our competitors. To the extent that our competitors offer our channel partners more favorable
terms or more compelling products, such partners may decline to carry, de-emphasize or discontinue carrying our products. In the
future, we may not be able to retain or attract a sufficient number of qualified channel partners. Further, such partners may not
recommend, or continue to recommend, our products. In the future, our OEMs or potential OEMs may elect to manufacture their own
products, similar to those we currently sell to them. The inability to establish or maintain successful relationships with distributors,
OEMs, retailers and telephony service providers or to expand our distribution channels could materially adversely affect our business,
financial condition or results of operations.
As a result of the growth of our B2C business, our customer mix is changing and certain retailers, OEMs and wireless carriers are
becoming more significant. This greater reliance on certain large channel partners could increase the volatility of our revenues and
earnings. In particular, we have several large customers whose order patterns are difficult to predict. Offers and promotions by these
customers may result in significant fluctuations of their purchasing activities over time. If we are unable to anticipate the purchase
requirements of these customers, our revenues may be adversely affected or we may be exposed to large volumes of inventory that
cannot be immediately resold to other customers.
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, competition on
sales terms and conditions, and continual performance, technical and feature enhancements by our competitors in the 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.
Currently, our single largest competitor is GN Store Nord A/S (“GN”), a Danish telecommunications conglomerate. We are currently
experiencing more price competition from GN in the business 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