Symantec 1999 Annual Report Download - page 40

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Introduction of new operating systems may cause significant fluctuations in our financial results and stock
price. The release and subsequent customer acceptance of current or enhanced operating systems are particularly
important events that increase the uncertainty and volatility of our results. If we are unable to successfully and timely
develop products that operate under existing or new operating systems, or if pending or actual releases of the new
operating systems delay the purchase of our products, our future net revenues and operating results could be materially
adversely affected.
Microsoft has incorporated advanced utilities into Windows 95, including:
• telecommunications capabilities;
• facsimile capabilities, which were later dropped from Windows 98; and
• data recovery utilities.
Microsoft has included additional product features in Windows 98, including:
• enhanced disk repair;
• disk defragmentation;
• system file maintenance;
• ISDN support; and
• PPTP virtual private networking.
Inclusions of features such as these and any additional features by Microsoft in new versions of Windows, including
Windows 2000 and Windows 98 Second Edition, may decrease the demand for certain of our products, including those
currently under development and products specifically intended for Windows 2000.
Microsoft’s Windows 98 operating system was introduced during the June 1998 quarter and Windows 98 Second
Edition is anticipated to be introduced at the end of 1999. We believe that weak retail software sales during the June
and September 1998 quarters compared to the March 1998 quarter may have been due, in part, to the release of
Windows 98 at the end of the June 1998 quarter. Our ability to generate revenue from many of our current products
and products currently under development could be less than anticipated in future periods due to reported
incompatibilities by end-users and delays in the purchase of our products as end-users first deploy Windows 98 and
Windows 98 Second Edition. In addition, we may face declining sales following Microsoft’s introduction of Windows
2000, which was formerly known as Windows NT 5.0, currently scheduled for the end of 1999.
Our financial results and our stock price declined significantly within approximately 6 months after the releases of
Windows 3.1, Windows 95 and Windows 98, which in some cases also caused the additional requirement for hardware
upgrades, resulting in shifts in customer spending from software to hardware. We could face adverse financial results
and additional stock price declines following future releases of operating systems.
Additionally, as hardware vendors incorporate additional server-based network management and security tools into
network operating systems, the demand may decrease for some of our products, including those currently under
development. Moreover, functionality previously provided only by software may be incorporated directly into
hardware, potentially reducing demand for our products. Furthermore, our competitors may license certain of their
products to Microsoft and OEMs for inclusion with their operating systems, add-on products or hardware, which may
also reduce the demand for certain of our products.
Shifts in customer spending from software to hardware as the result of technological advancements in hardware or
price reductions of hardware have in the past and may in the future, result in reduced revenues which have had and
could have a material adverse affect on operating results.
The trend toward consolidation in our industry may impede our ability to compete effectively. Consolidation in
the software industry continues to occur, with competing companies merging or acquiring other companies in order to
capture market share or expand product lines. As this consolidation occurs, the nature of the market may change as a
result of fewer players dominating particular markets, potentially providing consumers with fewer choices. Also, some
of these companies offer a broader range of products than Symantec, ranging from desktop to enterprise solutions. We
may not be able to compete effectively against these competitors. Any of these changes may have a significant adverse
effect on our future revenues and operating results.
Furthermore, we use strategic acquisitions, as necessary, to acquire technology, people and products for our overall
product strategy. We have completed a number of acquisitions and dispositions of technologies, companies and
products and may acquire and dispose of other technologies, companies and products in the future. The trend toward