Apple 1999 Annual Report Download - page 25

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third party suppliers, and the costs and availability of labor and resources to successfully address the Y2K issues and/or to execute on any
required contingency plans.
FACTORS THAT MAY AFFECT FUTURE RESULTS AND FINANCIAL CONDITION
COMPETITION
The personal computer industry is highly competitive and is characterized by aggressive pricing practices, downward pressure on gross
margins, frequent introduction of new products, short product life cycles, continual improvement in product price/performance characteristics,
price sensitivity on the part of consumers, and a large number of competitors. The Company's results of operations and financial condition have
been, and in the future may continue to be, adversely affected by industry wide pricing pressures and downward pressures on gross margins.
The industry has also been characterized by rapid technological advances in software functionality, hardware performance, and features based
on existing or emerging industry standards. Several competitors of the Company have either targeted or announced their intention to target
certain of the Company's key market segments, including consumer, education and publishing. Additionally, several of the Company's
competitors have introduced or announced plans to introduce products that mimic many of the unique design and technical features of the
Company's products. Many of the Company's competitors have greater financial, marketing, manufacturing, and technological resources, as
well as broader product lines and larger installed customer bases than those of the Company. Additionally, the Company's future operating
results and financial condition may be affected by overall demand for personal computers and general customer preferences for one platform
over another or one set of product features over another.
The Company is currently the only maker of hardware using the Mac OS. The Mac OS has a minority market share in the personal computer
market, which is dominated by makers of computers utilizing Microsoft Windows operating systems. The Company believes the innovative
industrial design of its products, the unique set of features its products currently provide, the perceived advantages of the Mac OS over
Windows, and the general reluctance of the Macintosh installed base to incur the costs of switching platforms, have been driving forces behind
sales of the Company's personal computer hardware in recent years. The Company is currently taking and will continue to take steps to respond
to the competitive pressures being placed on its personal computer sales as a result of the recent innovations in the Windows platform. The
Company's future operating results and financial condition are substantially dependent on its ability to continue to develop improvements to the
Macintosh platform in order to maintain perceived design and functional advantages over competing platforms.
PRODUCT INTRODUCTIONS AND TRANSITIONS
Due to the highly volatile nature of the personal computer industry, which is characterized by dynamic customer demand patterns and rapid
technological advances, the Company must continually introduce new products and technologies and enhance existing products in order to
remain competitive. The success of new product introductions is dependent on a number of factors, including market acceptance, the
Company's ability to manage the risks associated with product transitions, the availability of application software for new products, the
effective management of inventory levels in line with anticipated product demand, the availability of products in appropriate quantities to meet
anticipated demand, and the risk that new products may have quality or other defects in the early stages of introduction. Accordingly, the
Company cannot determine the ultimate effect that new products will have on its sales or results of operations.
The Company plans to continue to introduce upgrades to the current Mac OS, Mac OS 9, and later introduce a new operating system, Mac OS
X Client, which is expected to offer advanced functionality based on Apple and NeXT software technologies. It is uncertain whether Mac OS
X will gain developer support and market acceptance. Inability to successfully develop and make timely delivery of a substantially backward-
compatible Mac OS X or of planned enhancements to the current Mac OS, or to gain
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