Competition
The markets in which we compete are competitive and we expect competition to
intensify in the future. Our current and potential competitors include the
following:
. companies that network-enable devices, such as Digi International,
Echelon and Equinox;
. companies in the automation industries, such as Schneider and Siemens;
. companies with significant networking expertise and research and
development resources, including 3Com, Cisco Systems, Hewlett Packard,
IBM, Lucent and Nortel; and
. companies that produce semiconductors such as Cirrus Logic and National
Semiconductor.
Many of our current and potential competitors, alone or together with their
trade associations and partners, have significantly greater financial,
technical, marketing, service and other resources, greater name recognition,
broader product offerings, and longer operating histories.
We also compete with companies' in-house capabilities to network-enable
their products. Moreover, our current customers may, in the future, elect to
use their internal resources to create network capabilities for their products.
Our industry involves rapidly changing technology, frequent new product
introductions and evolving standards and protocols. To maintain or improve our
competitive position, we must continue to develop and introduce, on a timely
and cost-effective basis, new products and services. We must also maintain and
strengthen our relationships with OEMs, VARs and systems integrators.
The principal competitive factors that affect the market for our products
are:
. product quality, technological innovation, compatibility with standards
and protocols, reliability, functionality, ease of use, and
compatibility;
. price of our products; and
. potential customers' awareness and perception of our products as well as
device servers generally.
We offer an open architecture, meaning that much of our technology can be
licensed without royalties or licenses fees. As a result, our customers could
develop products that compete with our offerings. In addition, there is a risk
that our customers could develop and market their own applications based on our
technology without paying a fee to us.
If we are unable to compete successfully with new or existing competitors or
otherwise meet the competitive challenges we face, we could receive fewer
orders than we anticipate, lose existing customers, have reduced operating
margins and lose market share. This could harm our business and cause the price
of our stock to decline. |
