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Natural
MicroSystems Corporation
MANUFACTURING
We outsource
assembly of specific printed circuit boards to three ISO 9002
certified contract manufacturers, each of which is our sole
source for the products it manufactures.
We perform
quality control and final testing of completed products at
our Framingham facility, for which we received ISO 9002 certification
in 1996. Since then, we have participated in all required
processes and audits required to maintain this certification.
The British Approvals Board for Telecommunications conducted
its most recent audit in November 1999 and found no nonconformity.
We seek
to use industry-standard components for our products. Many
of these components are generally available from multiple
sources. However, we acquire certain custom integrated circuits
and other devices which are components on one or more of our
products from single-source suppliers. Although we believe
we could develop other sources for each of these custom devices,
the process could take several months.
COMPETITION
The market
for our products is highly competitive. We have many competitors
whose products compete with one or more of our products. We
may also compete with our existing and potential customers’
in-house development teams. Examples of our current competitors
include the Dialogic division of Intel Corporation, AudioCodes
Ltd., Radisys Corporation and Brooktrout Technology, Inc.
Some of our competitors may have greater resources than we
have. As we enter new markets, we expect to encounter competition
from additional competitors, some of which may also have greater
resources than we do.
INTELLECTUAL
PROPERTY AND PROPRIETARY RIGHTS
Our success
depends on proprietary technology and know-how. We rely primarily
on a combination of copyrights and restrictions on access
to our trade secrets to protect our proprietary rights. In
addition, we have applications pending on 17 patents and have
received a notice of allowance on one patent, which we expect
to issue shortly. We distribute our software products under
license agreements which grant customers a nonexclusive license
to use the software and contain certain terms and conditions
prohibiting its unauthorized reproduction or transfer. We
enter into confidentiality agreements with our suppliers and
customers when we disclose proprietary information to them.
In addition, we enter into confidentiality agreements and
assignment of invention agreements with our employees and
consultants. We believe that our products and technology do
not infringe on any existing proprietary rights of others.
Despite
these precautions, it may be possible for unauthorized third
parties to copy aspects of our products or to obtain information
that we regard as proprietary. We believe that, due to the
rapid pace of innovation within the industry in which we participate,
factors such as the technological and creative skills of our
personnel and ongoing reliable product maintenance and support
are more important in establishing and maintaining a leadership
position within the industry than are the various legal protections
for our technologies.
We depend
on development, supply, marketing, licensing and other relationships
with companies for complementary technologies necessary for
us to offer a broad range of products. These relationships
are generally nonexclusive, run for a finite term and are
renewable with the consent of both parties.
EMPLOYEES
As of
December 31, 1999, we had 399 full-time employees, including
62 in sales, 28 in marketing, 166 in research and development,
59 in services, 38 in operations and 46 in administration
and finance. None of the employees is represented by a labor
union. We have never experienced a work stoppage and consider
our relations with our employees to be good.
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