Symantec 2001 Annual Report Download - page 20

Competition in the consumer products market is intense. Some
of the companies that offer competing products to our Consumer
Products offerings include F-Secure, Internet Security Services,
McAfee.com, Network Associates, Norman, Panda, Secure Computing,
Sophos, and ZoneLabs. With the recent outbreaks of viruses and other
Internet-based security threats, several other companies have entered
the market and may become significant competitors in the future.
In the Enterprise Security and Administration market, we compete
against several companies who offer competing products to our tech-
nology solutions (firewalls/VPN, intrusion detection, vulnerability
management, web access management, and virus protection) and sup-
port. Some of the companies that we compete against are BindView,
Checkpoint, Cisco, Computer Associates, ISS, Netopia, Network
Associates, Norman, Nortel, Panda, PentaSafe, PowerQuest, Stac
Software, SonicWALL, Traveling Software, Trend Micro, and
WebSense.
Price competition is intense with most of our products. We expect
price competition to continue to increase and become even more
significant in the future, which may reduce our profit margins.
We also face competition from a number of other products that offer
levels of functionality different from those offered by our products, or
that were designed for a somewhat different group of end-users than
those targeted by us. Operating system vendors such as Microsoft have
added features to new versions of their products that provide some of
the same functions offered in our products. Microsoft has incorporated
advanced utilities in Windows 95, Windows 98, Windows 2000,
Windows Millennium Edition, and Windows XP, and we believe this
trend will continue. In addition, several other operating systems are
gaining market acceptance, such as Red Hat Linux, Solaris and Unix-
based operating systems, and they may also incorporate advanced
utilities or other functionality offered in our products. While we plan
to continue to improve our products with a view toward providing
enhanced functionality over that provided in current and future
operating systems, these efforts may be unsuccessful and any improved
products may not be commercially accepted by users. We will also
continue to attempt to cooperate with operating system vendors to
make our products compatible with those operating systems, while
at the same time, differentiating our utility products from features
included in these operating systems. Our efforts in this regard may
be unsuccessful.
The demand for some of our products, including those currently
under development, may decrease if, among other reasons:
•Microsoft includes additional product features in future releases
of Windows;
•hardware vendors incorporate additional server-based network
management and security tools into network operating systems; or
•competitors license certain of their products to Microsoft or
original equipment manufacturers for inclusion in their
operating systems or products.
In addition, we compete with other computer software companies for
access to retail distribution channels and for the attention of customers
at the retail level and in corporate accounts. We also compete with
other software companies to acquire products or companies and to
publish software developed by third parties.
Many of our existing and potential competitors may have greater
financial, marketing or technological resources than we do. We believe
that competition in the industry will continue to intensify as most
major software companies expand their product lines into additional
product categories.
Manufacturing Our product development groups produce a set of
master CD-ROMs or diskettes and documentation for each product
that are then duplicated or replicated and packaged into products by
our logistics organization. All of our domestic manufacturing and
order fulfillment is performed by an outside contractor under the
supervision of our domestic logistics organization. Purchasing of
all raw materials is done by Symantec personnel in our Cupertino,
California facility and Dublin, Ireland facility for products manufac-
tured in those countries. The manufacturing steps that are
subcontracted to outside organizations include the duplication of
diskettes and replication of CD-ROMs, printing of documentation
materials and retail boxes, and assembly of the final packages. We
perform diskette duplication, assembly of the final packages, and
order fulfillment in our Dublin, Ireland manufacturing facility for
most products distributed outside of North and South America.
Intellectual Property We regard our software as proprietary. We
attempt to protect our software technology by relying on a combina-
tion of copyright, patent, trade secret and trademark laws, restrictions
on disclosure and other methods. Litigation may be necessary to
enforce our intellectual property rights, to protect trade secrets or
trademarks or to determine the validity and scope of the proprietary
rights of others. Furthermore, other parties have asserted and may,
in the future, assert infringement claims against us. These claims and
any litigation may result in invalidation of our proprietary rights.
Litigation, even if not meritorious, could result in substantial costs
and diversion of resources and management attention.
Employees As of March 31, 2001, we employed approximately 3,800
people worldwide, including approximately 1,950 in sales, marketing
and related staff activities, 950 in product development, 100 in
consulting services, and 800 in management, manufacturing,
administration and finance. None of our employees are represented
by a labor union and we have experienced no work stoppages. We
believe that relations with our employees are good. Competition in
recruiting personnel in the software industry is intense. We believe
that our future success will depend in part on our ability to recruit
and retain highly skilled management, marketing and technical
personnel. We believe that we must provide personnel with a
competitive compensation package, which necessitates the
continued availability of stock options and shares to be issued
under our employee stock option and purchase plans.
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