the 2009 Annual Report (pdf) - PLX Technology

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all
amendments to those reports and the Proxy Statement for our Annual Meeting of Stockholders are made available,
free of charge, on our website, http://www.plxtech.com, as soon as reasonably practicable after the reports have been
filed with or furnished to the Securities and Exchange Commission.
Industry Background
The market for industry-standard interconnect has been invigorated by new state-of-the-art serial technologies.
Previous parallel technologies, such as PCI, provided basic connectivity, but did not offer the necessary scalability,
reliability, cost, and features for complex processing systems. As the subsystems, including the processing engines
and end point devices became more powerful, the true bottleneck in the system was not the device and processor
speed, but rather how quickly the data could be transferred to and from the different subsystems.
At the same time the cost, complexity, and time-to-market problems of developing robust, high performance
interconnect vehicles lead to the development of standards that provide the performance and features necessary for
high performance systems, but do so at a cost point that can only be achieved through high volume standard products.
These serial technologies enabled, for the first time, the ability to offer high performance, feature-rich computing
solutions using off-the-shelf standards-based building blocks. The building block approach has enabled the designers
of these systems to bring their products to market more quickly and with a vastly lower cost of development. In
addition, the software base that has built up around these standard solutions allow the system designer to focus on
their own added value, rather than recreating the basic plumbing necessary to move the data around.
PLX focuses on connecting together subsystems based on high volume, standard connection points. There are
several aspects of this. In one aspect, the company serves a horizontal market need with its general purpose PCI
Express and USB devices.
PCI Express is the primary interconnection mechanism inside computing systems today. By remaining software
compatible with the previous, ubiquitous parallel technology, the new switched serial PCI Express quickly became
the connection of choice for the majority of devices in the industry. Since there is a PCI Express port on almost every
system building block, the least costly and highest performance approach for connecting the devices together is
through this interconnection pathway. However, to provide appropriate connection between subsystems in complex
multi-chip systems, a switch is the most cost-effective approach. The switch is thus a fundamental building block for
the system, carrying data to and from the subsystems without impeding the native performance of the underlying
devices. For those few end points which do not have native PCI Express connections, PLX also provides bridges to
translate the protocol.
The Universal Serial Bus (USB) was designed to replace the expensive, slow, unreliable, and unscalable parallel
interconnects of the time, originally to connect PCs with peripherals such as printers and external storage. Its speed
has been upgraded continuously since its initial rollout, and USB has become the most popular “box-to-box”
interconnect in the industry. USB has become the natural way that users upgrade their system with peripherals,
eliminating the need to open the box and add plug-in cards.
PLX has recently added a vertical market capability to its more general-purpose interconnect products. These
products address the fast growing consumer/SOHO storage market. The amount of digital data that consumers need
to store is increasing exponentially. Trends such as digital photography, digital video, MP3s and the on-line
distribution of high-definition movies are driving increased sales of external storage devices in the consumer
market. Corresponding with these trends, demand for data-protection features such as redundant array of inexpensive
disks (RAID), automatic back-up, and encryption is also growing.
The Direct Attached Storage (DAS) market consists of products that allow the user to upgrade their storage
through the USB connection on their PC. These systems can be configured in a variety of ways. The simplest of
such systems consist of single drive upgrades to increase capacity, for backup, or to provide security encryption. By
adding multiple drives to the connection, the user can make use of standards such as RAID for higher reliability (by
mirroring the information on multiple disks) or higher performance (by reading and writing to multiple disks at once).
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