Symantec 2016 Annual Report Download - page 103

If we fail to manage our sales and distribution channels effectively, or if our partners choose not to market
and sell our products to their customers, our operating results could be adversely affected.
We sell our products to customers around the world through multi-tiered sales and distribution networks. Sales
through these different channels involve distinct risks, including the following:
Direct Sales. A significant portion of our revenues from enterprise products is derived from sales by our direct
sales force to end-users. Special risks associated with direct sales include:
• Longer sales cycles associated with direct sales efforts;
• Difficulty in hiring, retaining, and motivating our direct sales force, particularly through periods of
transition in our organization; and
• Substantial amounts of training for sales representatives to become productive in selling our products
and services, including regular updates to cover new and revised products, and associated delays and
difficulties in recognizing the expected benefits of investments in new products and updates.
Indirect Sales Channels. A significant portion of our revenues is derived from sales through indirect channels,
including distributors that sell our products to end-users and other resellers. This channel involves a number of
risks, including:
• Our lack of control over the timing of delivery of our products to end-users;
• Our resellers and distributors are generally not subject to minimum sales requirements or any
obligation to market our products to their customers;
• Our reseller and distributor agreements are generally nonexclusive and may be terminated at any time
without cause;
• Our resellers and distributors frequently market and distribute competing products and may, from time
to time, place greater emphasis on the sale of these products due to pricing, promotions, and other
terms offered by our competitors; and
• The consolidation of electronics retailers has increased their negotiating power with respect to
hardware and software providers such as us.
OEM Sales Channels. A portion of our revenues is derived from sales through our OEM partners that incorporate
our products into, or bundle our products with, their products. Our reliance on this sales channel involves many
risks, including:
• Our lack of control over the volume of systems shipped and the timing of such shipments;
• Our OEM partners are generally not subject to minimum sales requirements or any obligation to
market our products to their customers;
• Our OEM partners may terminate or renegotiate their arrangements with us and new terms may be less
favorable due to competitive conditions in our markets and other factors;
• Sales through our OEM partners are subject to changes in general economic conditions, strategic
direction, competitive risks, and other issues that could result in a reduction of OEM sales;
• The development work that we must generally undertake under our agreements with our OEM partners
may require us to invest significant resources and incur significant costs with little or no assurance of
ever receiving associated revenues;
• The time and expense required for the sales and marketing organizations of our OEM partners to
become familiar with our products may make it more difficult to introduce those products to the
market; and
• Our OEM partners may develop, market, and distribute their own products and market and distribute
products of our competitors, which could reduce our sales.
If we fail to manage our sales and distribution channels successfully, these channels may conflict with one
another or otherwise fail to perform as we anticipate, which could reduce our sales and increase our expenses as
15