| The company believes that the primary competitive factors in its markets are product performance and features, sales and distribution capabilities and total cost. The company's present direct competitors include a number of private and public companies such as Dynatech Corporation, Expersoft Corporation, Neuron Data, Inc., PeopleSoft, Inc.'s Red Pepper Software subsidiary, Rogue Wave Software, Inc., SL Corporation, Template Software, Inc. and Visix Software Inc. The company also competes with companies that provide packaged software with respect to specific applications. In addition, virtually all of the company's customers have significant investments in their existing solutions and have the resources necessary to enhance existing products and to develop future products. These customers have or may develop and incorporate competing technologies into their systems, thereby replacing the company's current or proposed libraries. This would eliminate their need for the company's services and libraries and limit future opportunities for the company. The company therefore is required to persuade development personnel within these customers' organizations to outsource the development of their software and to provide products and solutions to these customers that cost-effectively compete with their internally developed products. The company expects to face additional competition from other established and emerging companies if the market for its libraries continue to develop and expand. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to increase the ability of their products to address the needs of the company's prospective customers. Accordingly, it is possible that new competitors or alliances among competitors may emerge and rapidly gain significant market share. New or enhanced products introduced by existing or future competitors could increase the competition faced by the company's products. Increased competition could result in fewer customer orders, price reductions, reduced transaction size, reduced gross margins and loss of market share, any of which could have a material adverse effect on the company's business, operating results and financial condition. There can be no assurance the company will be able to maintain prices for products at levels that will enable the company to market its products profitably. Any decrease in prices, as a result of competition or otherwise, could have a material adverse effect on the company's business, operating results and financial condition. Some of the company's current, and many of the company's potential, competitors have longer operating histories, significantly greater financial, technical, marketing, service and other resources, significantly greater financial, technical, marketing, service and other resources, significantly greater name recognition, broader product offerings and a larger installed base of customers than the company. In addition, the company's current and potential competitors may have well-established relationships with current and potential customers of the company. As a result, such competitors may be able to devote greater resources to the development, promotion and sale of their products, may have more direct access to corporate decision-makers based on previous relationships and may be able to respond more quickly to new or emerging technologies and changes in customer requirements. There can be no assurance that the company will be able to compete successfully against current or future competitors or that competitive pressures will not have a material adverse effect on its business, operating results and financial condition. |