The solid-state storage market is evolving and future digital film formats
may not use our core technology or we may be forced to pay a royalty to sell
digital film in these formats.
Our products may become less useful to our customers if we are unable to
respond to technological advances in our industry or as innovative products
become available to our customers. Although many digital cameras currently
use Compact Flash, Memory Stick or Smart Media Cards, future digital cameras
may use other digital film formats, such as compact discs, rotating media,
micro-optical storage or magneto-optical storage, which may not use our
controller technology. If these other digital film formats were to gain
broad consumer acceptance, demand for our controller technology would
decline, which would negatively impact our gross margins and operating
results. In addition, we may have to obtain a license to manufacture some
digital film formats. For example, a consortium led by SanDisk, Matsushita
and Toshiba introduced the Secure Digital Card format. In addition,
DataPlay has introduced a low cost micro-optical device. We may be unable to
secure licensing arrangements for these or other future technologies at
reasonable rates or at all. Matrix Semiconductor has announced that it
soon plans to introduce a one time programmable memory with significant cost
savings over the types of memory that are currently commercially available.
If we are unable get access to such technology at competitive prices, our
business may be adversely affected. |
