Plantronics 2014 Annual Report Download - page 26

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• Periodically, we or our competitors announce new products, capabilities, or technologies that may replace or shorten the
life cycles of our products or cause customers to defer or stop purchasing our products until new products become available.
Additionally, new product announcements may incite customers to increase purchases of successful legacy products as
part of a last-time buy strategy, thereby increasing sales in the short-term while decreasing future sales by delaying
adoption of new products. These risks increase the difficulty of accurately forecasting demand for discontinued products
and new products. Accordingly, we must effectively manage inventory levels during the transition to ensure an adequate
supply of the new product and avoid retention of excess legacy product. Our failure to effectively manage transitions
from old to new products could result in inventory obsolescence and loss of revenue and associated gross profit.
Any of the foregoing could materially and adversely affect our business, financial condition, and results of operations.
Prices of certain raw materials, components, semiconductors, and sub-assemblies may rise depending upon global market
conditions which may adversely affect our margins.
We have experienced and expect to continue to experience volatility in prices from our suppliers, particularly in light of the price
fluctuations of oil, gold, copper, and other materials and components in the U.S. and around the world. We expect to continue
experiencing volatility, which could negatively affect our profitability or market share. If we are unable to pass cost increases on
to our customers or to achieve operating efficiencies that offset these increases, our business, financial condition, and results of
operations may be materially and adversely affected.
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.
All of the markets in which we sell our products are intensely competitive and market leadership has the potential to change as a
result of new product introductions and pricing. We face pressure on our selling prices, sales terms and conditions, and in connection
with product performance and functionality. Also, aggressive industry pricing practices may result in decreasing margins.
Currently, one of our primary competitors is GN Netcom, a subsidiary of GN Store Nord A/S (“GN”), a Danish telecommunications
conglomerate with whom we compete in the office, OCC, and consumer markets. We also experience competition from consumer
electronics companies that manufacture and sell mobile phones or computer peripheral equipment. Many of our competitors are
larger, offer broader product lines, may integrate their products with communications headset devices and adapters manufactured
by them or others, offer products that are incompatible with our headsets, and have substantially greater financial, marketing, and
other resources.
Competitors in audio devices vary by product line. The most competitive product line is headsets for cell phones where we compete
with GN's Jabra brand, Motorola, Samsung, LG, and Bose, among many others. Many of these competitors have substantially
greater resources than us, and each of them has established market positions in this business. In the UC and OCC markets, the
largest competitors are GN, Sennheiser Communications, and Logitech. For the entertainment and computer audio markets, our
primary competitors are Sennheiser, Logitech, Beats, LG, Jaybird, Motorola, and Bose. For the gaming market, our primary
competitors are Turtle Beach, Skullcandy, and Razer. We face additional competition from companies, principally located in the
Asia Pacific region, which offer very low cost headset products, including products that are modeled on or are direct copies of
our products, resulting in market pricing pressure. If market prices are substantially reduced by new entrants into the headset
market, our business, financial condition, or results of operations could be materially and adversely affected.
If we do not distinguish our products, particularly our retail products, through distinctive, technologically advanced features and
design, as well as continue to build and strengthen our brand recognition, our products may become commoditized and our business
could be harmed. In addition, failure to effectively market our products to customers could lead to lower and more volatile revenue
and earnings, excess inventory, and the inability to recover associated development costs, any of which could also have a material
adverse effect on our business, financial condition, results of operations, and cash flows.