| The markets for the Company's products are intensely competitive, rapidly
evolving and subject to rapid technological change. The principal competitive
factors in this market include, or are likely to include, product performance
and features, reliability, technical support and service, relationships with
cable system operators and systems integrators, compliance with industry
standards, compatibility with the products of other suppliers, sales and
distribution interoperability, strength of brand name, price, long-term cost of
ownership to cable operators and general industry and economic conditions. Many of the Company's current and potential competitors have longer operating histories, greater name recognition and significantly greater financial,
technical, marketing and distribution resources than the Company. Such
competitors may undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and devote substantially more resources to
developing new products than the Company. There can be no assurance that the Company will be able to compete successfully against current or future competitors or that competitive pressures faced by the Company will not
materially adversely affect the Company's business, operating results and
financial condition. In response to changes in the competitive environment, the Company may make certain pricing, service, marketing or other strategic
decisions that could have a material adverse effect on the Company's business, operating results and financial condition. There can be no assurance that the Company's competitors will not develop enhancements to, or future generations of, products that will offer prices or performance superior to that of the Company's products. The Company believes that the broad adoption of MCNS will cause increased competition in the North American market, which is likely to negatively affect the Company's gross margin. There can be no assurance that competitors will not more quickly develop MCNS-compliant products than the Company. |