Plantronics 2009 Annual Report Download - page 15

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In the AEG segment, our major competitors include Bose, Apple, Logitech, Creative Labs, iHome, and Harman International. AEG
predominantly serves the consumer electronics market. This market is principally served by the retail channel, and, to a lesser extent,
through certain OEMs. We are experiencing a new dynamic in the consumer electronics industry driven by the digital evolution that
is influencing the way consumers look for solutions to their musical entertainment needs. Our key competition is coming from new
and existing solution providers that offer a convenient, cost effective and lifestyle-compatible method of delivering content when
people want it, where they want it, and how they want it.
We believe the principal factors for AEG to be successful and competitive in each of its markets are the following:
· our understanding of changing market trends, consumer needs, technologies and our ability to capitalize on the opportunities
resulting from these market changes;
· bringing to market well-differentiated products that perform well against competitive offerings, price, style, brand, and
effective displays in retail settings;
· efficient and cost-effective supply chain processes; and
· excellent channel service and support with a reputation for quality.
We believe that we have competed successfully with respect to these factors with our ACG products; however, we have not recently
competed successfully with our AEG products. We substantially completed the refreshment of the AEG product line in fiscal 2009
but did not achieve the anticipated results due to a weaker than expected holiday season and the economic decline due to the global
recession. We are evaluating various alternatives to achieve profitability for AEG and project the segment will generate relatively
small losses in the first half of fiscal 2010 and should be profitable in the second half of fiscal 2010 based on new products with lower
costs comprising most of the sales mix by the second half of the fiscal year.
RESEARCH AND DEVELOPMENT
We believe that the future success of our business depends upon our ability to enhance our existing products, to develop compelling
new products, to develop cost effective products, to qualify these products with our customers, to successfully introduce these
products to existing and new markets on a timely basis, and to commence and sustain volume production to meet customer demands.
During fiscal 2009, we developed innovative products that enabled us to better address changing customer demands and emerging
market trends. Specifically, we introduced a number of new products, which featured new technologies to address both the ACG and
AEG market trends. Our goal is to bring the right products to market at the right time, and we will continue to improve our
development processes during fiscal 2010.
Our core R&D focus in fiscal 2010 is on UC which will require incremental investments in firmware and software engineering to
ensure the broad compatibility of our products in the enterprise systems with which they will be deployed. We are also investing in
this area with the goal of increasing the value-add of our products and offerings. We expect to reduce the level of internal staffing and
the related expense in Bluetooth new product development and rely to a greater extent on development partners. We will also
continue our efforts to improve the efficiency of our development processes through strategic architecting, common platforms,
increased use of software tools, and better training.
The success of new product introductions is dependent on a number of factors, including appropriate new product selection, timely
completion and introduction of new product designs, cost-effective manufacturing of such products, quality of new products, the
acceptance of new technologies such as Bluetooth, and general market acceptance of new products. Traditionally, the technology of
telephone headsets has evolved slowly, and our product life cycles have historically been relatively long. The next generation
products usually include stylistic changes and quality improvements, but these products are based on technology that is similar to our
existing products. Our newer emerging technology products, particularly in the mobile and computer markets, are exhibiting shorter
life cycles more similar to the consumer electronics market and are consequently more sensitive to market trends and fashion. With
the acquisition of Altec Lansing, we have increased our consumer business in the electronics markets. We believe that changes in
technology will come at a faster pace. In addition, to avoid product obsolescence, we will continue to monitor technological changes
in telephony, as well as users' demands for new technologies.