Symantec 2012 Annual Report Download - page 94

acquisition of McAfee, could result in larger competitors that compete with us on several levels. We also face
competition from many smaller companies that specialize in particular segments of the markets in which we
compete.
Our business models present execution and competitive risks.
In recent years, our SaaS offerings have become increasingly critical in our business. Our competitors are
rapidly developing and deploying SaaS offerings for consumers and business customers. Pricing and delivery
models are evolving. Devices and form factors influence how users access services in the cloud. We are devoting
significant resources to develop and deploy our own SaaS strategies. We cannot assure you that our investments
in and development of SaaS offerings will achieve the expected returns for us or that we will be able to compete
successfully in the marketplace. In addition to software development costs, we are incurring costs to build and
maintain infrastructure to support SaaS offerings. These costs may reduce the operating margins we have
previously achieved. Whether we are successful in this business model depends on our execution in a number of
areas, including:
• Continuing to innovate and bring to market compelling cloud-based experiences that generate increasing
traffic and market share; and
• Ensuring that our SaaS offerings meet the reliability expectations of our customers and maintain the
security of their data.
Our increasing focus on the delivery of products in an appliance form factor creates new business and
financial risks.
During fiscal 2012, we began shipping more products to customers in an appliance form factor, and we
expect this trend to continue. The delivery of solutions in the form of appliances creates new business and
financial risks, including the following:
• increased cost of components and contract manufacturing, as we do not own our manufacturing facilities;
• supply chain issues, including financial problems of contract manufacturers or component suppliers;
• a shortage of adequate component supply or manufacturing capacity that increases our costs and/or causes
a delay in order fulfillment;
• excess inventory levels, which could lead to write-downs or obsolescence charges;
• additional reserves for product returns;
• challenges in managing our channel business;
• tax and trade compliance complications; and
• local field support of customers’ appliances.
We cannot assure you that we will continue to have success in our appliance business.
Defects or disruptions in our SaaS offerings could reduce demand for our services and subject us to
substantial liability.
Our SaaS offerings may contain errors or defects that users identify after they begin using them that could
result in unanticipated service interruptions, which could harm our reputation and our business. Since our
customers use our SaaS offerings for mission-critical protection from threats to electronic information, endpoint
devices, and computer networks, any errors, defects, disruptions in service or other performance problems with
our SaaS offerings could significantly harm our reputation and may damage our customers’ businesses. If that
occurs, customers could elect not to renew, or delay or withhold payment to us, we could lose future sales or
customers may make warranty or other claims against us, which could result in an increase in our provision for
doubtful accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation.
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