TiVo 2013 Annual Report Download - page 26

Table of Contents
our products and the numerous components that go into our products. For instance, a number of our key components in our products are
supplied from a single source, and finding alternatives components that would be conflict mineral free in some cases could be expensive and
cause delays in our ability to manufacture our products and meet customer demand. In addition, we will incur additional costs to comply with
the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in our
products. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals and metals used in our
products through the due diligence procedures that we implement, which may harm our reputation. In such event, we may also face
difficulties in satisfying customers who require that all of the components of our products are certified as conflict mineral free.
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
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We have from time-to-time outsourced engineering work related to the design, development, and manufacturing of our products, typically to
save money and gain access to additional engineering resources. We have worked, and expect to in the future work, with companies located
in jurisdictions outside of the United States, including, but not limited to, India, Ukraine, the United Kingdom, and Mexico. We have limited
experience in the outsourcing of engineering, manufacturing, and other work to third-parties located internationally that operate under
different laws and regulations than those in the United States. If we are unable to properly manage and oversee the outsourcing of this
engineering, manufacturing and other work related to our products, we could suffer the loss of valuable intellectual property, or the loss of the
ability to claim such intellectual property, including patents, trademarks, trade secrets, and copyrights. We could also be subjected to
increased regulatory and other scrutiny related to export control restrictions which could impede or prevent us from working with international
partners. Additionally, instead of saving money, we could in fact incur significant additional costs as a result of inefficient engineering services
and poor work product. As a result our business would be harmed, including our financial results, reputation, and brand.
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Our ability to provide uninterrupted service and high quality customer support depends on the efficient and uninterrupted operation of our
computer and communications systems. Our computer hardware and other operating systems for the TiVo service are vulnerable to damage
or interruption from earthquakes, floods, fires, power loss, telecommunication failures, and similar events. They are also subject to break-
ins, sabotage, intentional acts of vandalism, and similar misconduct. Our ability to provide uninterrupted service may also be impacted by
internal system errors, bugs, and software deployment issues which may cause us to not meet MSO customers. These types of
interruptions in the TiVo service may reduce our revenues and profits, including possible termination of existing MSO customer contracts.
We currently house the server hardware that delivers the TiVo service at only one location; however, in the event that location became
unavailable, we do have a backup facility capable of delivering the TiVo service. Our business also will be harmed if consumers or our MSO
customers believe our service is unreliable. In addition to placing increased burdens on our engineering staff, service outages create a high
volume of customer questions and complaints that must be responded to by our customer support personnel. Any frequent or persistent
system failures could irreparably damage our reputation and brand and possibly trigger requests for refunds on subscription fees and
hardware purchases and possible consumer litigation.
We have detected in the past and may continue to detect software and manufacturing errors in our products in the future 
These problems can affect system uptime and result in significant warranty and repair problems, which could cause customer service and
customer relations problems. Correcting errors in our software or fixing defects in our products requires significant time and resources, which
could delay product releases and affect market acceptance of the TiVo service. Any delivery by us of products or upgrades with undetected
material product defects or software errors could harm our credibility and market acceptance of the DVRs and the TiVo service. In addition,
defective products could cause a risk of injury that may subject us to litigation or cause us to have to undertake a product recall. For example,
we previously became aware of occasions where a part came loose from the remote control device that comes with the DVRs that enable the
TiVo service, including occurrences where a young child gagged on or ingested a part of the remote control device. While we are unaware of
any injuries resulting from the use of our products, we may be subject to products liability litigation in
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