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generated from sales to customers in the United States, Asia and Europe, respectively, for the pastthree fiscal years.Year EndedNovember 30,2005 2004 2003United States ................................... 52.0% 61.3% 60.9%Asia .......................................... 37.2% 27.7% 29.0%Europe ....................................... 10.8% 11.0% 10.1%CompetitionThe market for network and storage systems and storage infrastructure products is competitive,and we expect this competition to increase. To maintain and improve our competitive position, we mustcontinue to develop and introduce, on a timely and cost-effective basis, new product features andapplications that keep pace with technological developments and emerging industry standards, and thataddress the increasingly sophisticated needs of our customers. The principal competitive factorsaffecting the market for our products are:• early identification of emerging opportunities;• being first to market with emerging technologies;• complementing customer objectives without competing with customers;• providing cost-effective solutions;• maintaining high product performance and reliability;• continuously expanding product scalability, flexibility and ease of use;• delivering modular subsystem designs integrated with customer technology;• offering support for emerging high-speed communication protocols; and• increasing localized and responsive customer support on a worldwide basis.We believe that we compete favorably with respect to each of these factors and have gainedsignificant market share in many of our targeted markets. We believe our success has been driven byour technological leadership, our significant investment in research and development, our ability togenerate customer loyalty and our track record of anticipating market trends.We compete with companies active in providing storage subsystems and components to OEMs,including Dot Hill Systems Corp. and LSI trading as Engenio Information Technologies Inc. We facecompetition from internal development efforts of existing and potential customers. Such efforts can alsobe in collaborations with emerging technology companies. In addition, we face potential competitionfrom new entrants including our current technology suppliers.Legal ProceedingsFrom time to time, we may become involved in legal proceedings relating to claims arising out ofour operations in the normal course of business. In particular, others may assert patent, copyright,trademark and other intellectual property rights to technologies that are important to our business ormake claims that we infringe their intellectual property.We are not currently a party to any litigation or arbitration proceedings, nor are we aware of anythreatened or potential legal proceedings which could significantly harm our financial condition.37