| The market for performance management software is intensely competitive,
fragmented and characterized by increasingly rapid technological developments, evolving standards and rapid changes in customer requirements. To maintain and improve its position in this market, Landmark is enhancing current products and the inter-operability of its products with one another and developing new products. Landmark competes primarily with vendors that provide mainframe performance management software and vendors that provide client/server performance management software. The Company believes that principal competitors with respect to mainframe performance management software products include Candle Corporation and Boole and Babbage, Inc. In the client/server market, Landmark believes that its principal competitors include BMC Software, Inc., Compuware Corporation, BGS Systems Inc. and Platinum technologies, inc. The Company believes that no single principal competitor currently offers products in each of the mainframe, UNIX and Windows NT operating environments. Some of the Company's competitors have longer operating histories and substantially greater financial, technical, sales, marketing and other resources, as well as greater name recognition and a larger customer base, than those of the Company. The Company's current and future competitors could introduce products with more features, greater scalability, increased functionality and lower prices than the Company's products. These competitors could also bundle existing or new products with other, more established products
in order to compete with the Company. The Company's focus on performance
management software may be a disadvantage competing with vendors that offer a broader range of products. Moreover, as the client/server performance management software market develops, a number of companies with significantly greater resources than those of the Company could increase their presence in this market by acquiring or forming strategic alliances with competitors or business partners of the Company. In addition, due to potentially lower barriers to entry for platform-specific niche products in the performance management software market, the Company believes that emerging companies may enter this market, particularly in the client/server environment. Increased competition is likely to result in price reductions, reduced gross margins and loss of market share, any of which could materially and adversely affect the Company's business, financial condition and results of operations. Any material reduction in the price of the Company's products would negatively affect gross margins and would require the Company to increase software unit sales in order to maintain gross profits. There can be no assurance that the Company will be able to compete successfully against current and future competitors, and the failure to do so would have a material adverse effect upon the Company's business, financial condition and results of operation. The principal competitive factors affecting the market for Landmark's products are functionality and features (including breadth of data collection, data management, integration and modeling), product quality, platform coverage, product architecture, price, customer support and name recognition. Based on thesefactors, the Company believes that it has competed effectively to date. In the future, Landmark will be required to respond promptly and effectively to the challenges of technological change, its competitors' innovations and customer requirements. There can be no assurance that Landmark will be able to provide products that compare favorably with the products of the Company's competitors or that competitive pressures will not require the Company to reduce its prices. |