iRobot 2010 Annual Report Download - page 64

business with that partner, require us to assume more credit risk relating to that partner’s receivables or limit our
ability to collect amounts related to previous purchases by that partner, all of which could harm our business and
financial condition. Disruption of the iRobot on-line store could also decrease our home care robot sales.
Even if consumer robots gain wide market acceptance, our robots may not adequately address market
requirements and may not continue to gain market acceptance. If robots generally, or our robots specifically, do not
gain wide market acceptance, we may not be able to achieve our anticipated level of growth, and our revenue and
results of operations would suffer.
We face intense competition from other providers of robots, including diversified technology providers, as
well as competition from providers offering alternative products, which could negatively impact our
results of operations and cause our market share to decline.
We believe that a number of companies have developed or are developing robots that will compete directly
with our product offerings. Additionally, large and small companies, government-sponsored laboratories and
universities are aggressively pursuing contracts for robot-focused research and development. Many current and
potential competitors have substantially greater financial, marketing, research and manufacturing resources than we
possess, and there can be no assurance that our current and future competitors will not be more successful than us.
Moreover, while we believe many of our customers purchase our floor vacuuming robots as a supplement to, rather
than a replacement for, their traditional vacuum cleaners; we also compete in some cases with providers of
traditional vacuum cleaners. Our competitors include developers of robot floor cleaning products, developers of
small unmanned ground vehicles, established government contractors working on unmanned systems, and
developers of small unmanned underwater vehicles.
The market for robots is highly competitive, rapidly evolving and subject to changing technologies, shifting
customer needs and expectations and the likely increased introduction of new products. Our ability to remain
competitive will depend to a great extent upon our ongoing performance in the areas of product development and
customer support.
In the event that the robot market expands, we expect that competition will intensify as additional competitors
enter the market and current competitors expand their product lines. Companies competing with us may introduce
products that are competitively priced, have increased performance or functionality, or incorporate technological
advances that we have not yet developed or implemented. Increased competitive pressure could result in a loss of
sales or market share or cause us to lower prices for our products, any of which would harm our business and
operating results.
We cannot assure you that our products will continue to compete favorably or that we will be successful in the
face of increasing competition from new products and enhancements introduced by existing competitors or new
companies entering the markets in which we provide products. Our failure to compete successfully could cause our
revenue and market share to decline, which would negatively impact our results of operations and financial
condition.
If critical components of our products that we currently purchase from a small number of suppliers
become unavailable, we may incur delays in shipment, which could damage our business.
We and our outsourced manufacturers obtain hardware components, various subsystems, raw materials and
batteries from a limited group of suppliers, some of which are sole suppliers. We do not have any long-term
agreements with these suppliers obligating them to continue to sell components or products to us. If we or our
outsourced manufacturers are unable to obtain components from third-party suppliers in the quantities and of the
quality that we require, on a timely basis and at acceptable prices, we may not be able to deliver our products on a
timely or cost-effective basis to our customers, which could cause customers to terminate their contracts with us,
reduce our gross margin and seriously harm our business, results of operations and financial condition. Moreover, if
any of our suppliers become financially unstable, we may have to find new suppliers. It may take several months to
locate alternative suppliers, if required, or to re-tool our products to accommodate components from different
suppliers. We may experience significant delays in manufacturing and shipping our products to customers and incur
additional development, manufacturing and other costs to establish alternative sources of supply if we lose any of
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