iRobot 2015 Annual Report Download - page 100

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data without constraining the recipient in how that data is used. The ability of third parties to use patents and technical data for
government purposes creates the possibility that the government could attempt to establish additional sources for the products
we provide that stem from these contracts. It may also allow the government the ability to negotiate with us to reduce our prices
for products we provide to it. The potential that the government may release some of the technical data without constraint
creates the possibility that third parties may be able to use this data to compete with us in the commercial sector.
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, and established government contractors working on
unmanned systems.
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 further, 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 these
sources. We cannot predict if we will be able to obtain replacement components within the time frames that we require at an
affordable cost, or at all.