Annual
`Report
`
`2014
`
`Execution
`
`Innovation
`
`Heritage
`
`Chrimar Systems, Inc.
`Exhibit 2038-1
`IPR2016-01426 USPN 9,019,838
`
`

`
`Financial Highlights
`
`NT$ in thousands
`
`Net Sales
`
`Gross Profit
`
`Operating Income
`
`Income Before Tax
`
`Net Income
`
`FX Rate (USD to NTD)
`
`Cash & Cash Equivalents
`
`Total Assets
`
`Long Term Loans
`
`Shareholder’s Equity
`
`Shares Outstanding **
`
`FX Rate (USD to NTD)
`
`** in thousands
`
`2014
`
`30,305,802
`
`8,273,704
`
`307,025
`
`143,457
`
`61,543
`
`30.3548
`
`3,613,497
`
`25,532,158
`
`0
`
`12,828,488
`
`647,756
`
`31.7660
`
`2013
`
` 30,588,474
`
`8,067,782
`
`398,273
`
` 746,251
`
` 647,609
`
`29.7671
`
`3,275,650
`
`24,457,789
`
`768,550
`
`13,347,713
`
`647,580
`
`29.95
`
`D-Link Corporation | Annual Report 2014 | 1
`
`Chrimar Systems, Inc.
`Exhibit 2038-2
`IPR2016-01426 USPN 9,019,838
`
`

`
`Letter to Shareholders, Customers,
`Partners, and Employees
`
`ROGER KAO
`Chairman & CEO
`
`A.P. CHEN
`President
`
`Challenges and Opportunities
`In 2014, despite a difficult macroeconomic environment,
`D-Link was able to achieve a great deal in a very competitive
`marketplace. The number of mydlink Cloud registered users
`reached over two and a half million, more than doubling the
`total seen in 2013. In particular, D-Link’s IP camera solutions have
`proven popular, earning an over 30% share of the consumer
`retail market in the U.S. and an over 60% share of the consumer
`retail market in Europe. Meanwhile, the continued development
`of our Connected Home product line — our collection of
`smart, automated solutions for the Internet of Things era —
`has positioned D-Link as a firm with several key competitive
`advantages in what promises to be an explosively expanding
`home automation market.
`
`Still, 2014 was a challenging year for us. Falling commodity
`prices and the end of quantitative easing from the U.S. both
`contributed to slowing growth in emerging markets. The oil
`price crisis and sanctions imposed against Russia as a result
`of its dispute with the Ukraine took a heavy toll on the ruble,
`negatively impacting D-Link’s bottom line in the process.
`
`Global economic instability notwithstanding, D-Link’s future
`prospects are bright and our strategy is sound. We are mitigating
`financial risk in economically volatile countries while aggressively
`pursuing opportunities in those parts of the world where we
`believe we can do better. We are prioritizing the continued
`development of our popular IP cameras, mydlink Cloud services,
`and Connected Home line as we seek to win new subscribers
`and translate our recent success in consumer markets to greater
`success in small to medium-sized business (SMB) markets that
`can also benefit from D-Link’s new offerings. And as we enter
`a new era of connectivity, we are pressing forward with an
`ever-improving product-mix that, buoyed by increased R&D
`investment, is paving the way toward an exciting future for both
`our company and our customers.
`
`Financial Performance
`In 2014, D-Link’s global consolidated revenue totaled NT$ 30.3
`billion. Operating income was NT$ 307 billion. Net income
`was NT$ 111 million, compared to the previous year's NT$ 676
`million. Still, thanks to improved product mix performance,
`a combined gross margin of 27.3% was seen in 2014, a slight
`increase over the 26.4% gross margin seen in 2013. Operating
`profit margin dropped to 1% from 1.3% last year. Annual earnings
`per share were NT$ 0.1, versus the previous year’s NT$ 1.06.
`Substandard overall operating performance in 2014 was due
`mainly to the rising US dollar in emerging market economies.
`
`Market Share
`According to technology research and advisory firm Gartner (1), in
`2014, D-Link ranked first in the Enterprise WLAN market based on
`standalone access points (762,600 units), with a worldwide market
`share of 50.4 %, up from 45.7% in 2013. In the Enterprise Ethernet
`Switch market, D-Link ranked third based on total port shipments
`(63.6 million ports) for a worldwide market share of 15.0%.
`Additionally, broadband products achieved annual shipments
`of 7.9 million units, and digital home products achieved annual
`shipments of 2.1 million units. Based on revenue share by product
`category (2), wireless products accounted for 33.4% of annual
`turnover, followed by 27.6% for switches, 18.7% for broadband
`telecom, and 20.3% for digital home and others.
`
`1 Source: Gartner, Market Share: Enterprise Network Equipment by
`Market Segment, Worldwide, 4Q14 and 2014.
`
`2 Source: D-Link 2014 Financial Report.
`
`A Strong Vision for the Future
`Our focus on high-margin, value-added, cutting-edge solutions
`continues to differentiate D-Link from low-cost, low-quality
`competitors, who are quickly losing relevance in the rapidly
`evolving consumer and business spaces. In order to excel in a new
`era of connectivity, successful firms will need to rely on innovation,
`integration, and brand recognition – three of D-Link’s core
`strengths.
`
`Our success in the IP camera market is a direct result of playing to
`these strengths, and in many ways serves as a blueprint for future
`achievement. Featuring our pioneering Zero Configuration setup
`and the powerful mobile management capabilities delivered by our
`easy-to-use mydlink Cloud services, these products have proven
`to be an attractive option for customers seeking an ideal mix of
`control, reliability, and convenience. When used in conjunction
`with our Cloud Router and Cloud Storage solutions, they allow
`D-Link to offer high-performance, one-stop cloud networking and
`surveillance solutions that millions of customers across the globe
`already trust.
`
`As we build upon our existing mydlink Cloud service framework in
`the future, you can also expect to see more innovative, integrated,
`all-in-one networking and security solutions tailored for SMBs.
`Taken together with a recent surge in the use of smart switches,
`which offer many of the benefits of managed switches but are
`less expensive and easier to manage, D-Link is poised to grab a
`bigger share of the SMB markets as businesses realize they can cut
`costs through more efficient networking and security solutions.
`D-Link’s superior management tools, language support, and brand
`recognition further strengthen our position as an industry leader.
`
`The Connected Home
`Today’s D-Link is defined by customer-centric thinking. We
`understand that this means more than simply responding to the
`needs of the markets we serve; we also must anticipate future
`developments within those markets. As the world enters the
`Internet of Things era, we know we can do more – and do it
`better – than our competition. That’s why we are creating a line
`of smart home products – named “Connected Home” – that will
`run on a new mydlink Home interface based on mydlink Cloud. In
`doing so, D-Link is ushering in a new era of home automation and
`convenience, one that was once only the stuff of science-fiction.
`
`The Connected Home will dramatically change the way we
`interact with our homes. Window, door, motion, and water sensors
`can all be brought online and are able to communicate with users
`whenever and wherever they have Internet access. For instance,
`you can set up a water sensor to push an e-mail alert to your
`smart phone if the basement floods while you are on vacation,
`significantly reducing potential water damage. A motion sensor
`can be programmed to turn on a light whenever someone enters
`a room for the sake of convenience, or to snap a picture of what
`caused the motion for enhanced security and peace of mind. And
`through our Smart Plugs, it is even possible to remotely control
`your appliances, or to set up on/off schedules and alerts that
`reduce energy consumption.
`
`Innovation Today and Tomorrow
`Competing on the cutting edge of Internet technology is no
`simple task, but D-Link is meeting the challenge head on. We
`were the first company to offer energy-saving “green” networking
`technology, the first to enter the 11AC router market, and the first
`to offer portable 11AC routers. We understand that in order to stay
`on top, we need to continue to innovate. So as part of our strategy
`for future growth, we increased our R&D spending by 18% in 2014.
`And with future plans to open a new R&D center in India, we are
`continuing our aggressive pursuit of technological advances that
`will deliver powerful solutions to our customers in the years to
`come as the demand for greater connectivity grows exponentially.
`
`In addition to developing brand new products for our expanding
`Connected Home line, we are also delivering high-end versions
`of traditional products to the marketplace featuring aesthetically
`pleasing, imaginative designs. Our new DIR-890L router, for
`example, embodies D-Link’s unique brand proposition as we move
`forward. In addition to delivering industry-leading data transfer
`speeds, the DIR-890L boasts a sleek, flamboyant, futuristic look that
`is guaranteed to turn heads in 2015. This emphasis on aesthetics
`as a means to create value for customers is something you can
`expect to see more of from us in the future.
`
`Global Service, Local Touch
`Much of D-Link’s past and present success is a direct result of our
`potent globalization strategy. With offices in 65 countries around
`the world, D-Link is already widely recognized as a formidable
`multinational enterprise able to leverage powerful synergies.
`D-Link’s global presence makes us highly responsive to local
`customer needs by focusing resources in developing localized
`applications, giving D-Link a critical advantage across markets and
`product segments. As our operation s become ever smarter and
`more efficient, we become better able to adapt to unpredictable
`global economic trends. Looking ahead, a renewed focus on
`expanding and improving our relationships with sales channels
`in all countries and at all levels (retailers, distributors, ITSPs and
`SIs) will ensure that more of our products and services are able to
`reach those customers who can benefit the most from them, all
`while reducing risk and cutting costs.
`
`Outlook
`Though the global macroeconomic environment will continue
`to pose complex challenges, D-Link’s highly differentiated, value-
`added strategy remains fundamentally sound. Our vision has
`proved particularly prescient in the consumer sphere, where we
`
`have made great strides. Thanks to the popularity of our Cloud
`Camera, Cloud Router, and Cloud Storage devices, and also to the
`widespread adoption of mydlink Cloud services, D-Link’s clout with
`consumers has never been stronger. The loyalty of these customers
`will prove indispensable as the march toward the Internet of Things
`continues and more and more home devices are being connected
`to the Internet and to each other.
`
`In this sense, the future has already arrived and the possibilities are
`endless. D-Link is responding to this dramatic shift in consumer
`hopes and expectations by expanding the range of products and
`services offered by the Connected Home, and by further enhancing
`our cloud platform and customer support systems. We realize
`that as the needs of consumers become more sophisticated, the
`demand for simple, elegant solutions only grows. D-Link is uniquely
`positioned to give the public exactly what it wants: the ability to
`easily access, control, view, and share their work, home, and digital
`lives.
`
`Meanwhile, the connectivity needs of SMBs in many ways mirror
`those of consumers in the retail space, and so we are confident
`that we can effectively win even greater market shares in the
`future. D-Link will continue to focus on providing comprehensive
`networking solutions for small to medium-sized businesses that
`are looking to cut costs while improving security and efficiency.
`Due to our powerful vertical synergies, easy-to-use cloud-enabled
`product line, and localized customer support, we will be able to
`offer SMBs single-vendor, one-stop solutions that simplify their
`IT operations on the one hand, yet offer additional flexibility,
`scalability, and control on the other. In particular, the move from
`analog surveillance systems to IP surveillance cameras is proving to
`be a major growth engine as businesses become more concerned
`about security and accountability.
`
`In the broadband sector, emerging markets transitioning to digital
`economies are rapidly adopting 4G LTE technology, and D-Link is
`capitalizing on this trend with cutting edge 4G LTE mobile routers
`and Wi-Fi hotspots that offer both consumers and businesses
`unparalleled convenience. With mobile operators expected to
`invest US$1.7TN in improving mobile broadband access from
`2014 – 2020, we are confident that we will win a large slice of the
`economic pie, both by virtue of our present status as an industry
`leader and because we are committed to staying on top through
`investment in innovation.
`
`In the midst of all these exciting technological advances and
`paradigm shifts, D-Link continues to recognize the importance
`of fine-tuning our global strategy. This means seizing new
`opportunities for joint-ventures and improving sales channel
`relationships in those countries in which we feel we can improve
`our performance (including Brazil, China, and the United States). It
`means capitalizing on our market dominance in those countries in
`which we are doing very well (such as India, where we are building
`a new R&D center). But it also means mitigating risk in times of
`worldwide economic instability. For example, we are renegotiating
`business contracts within at-risk nations to more accurately reflect
`the relative strength of local currencies in order to better shield
`ourselves from global economic instability.
`
`As D-Link confronts new challenges and pursues new opportunities
`in 2015, we wish to thank our shareholders for their long-term
`confidence in our vision, and also to extend our gratitude to the
`management team and our valued staff worldwide who continue to
`uphold the spirit of sound management, sustainable development,
`and corporate social responsibility. Through our concerted efforts,
`D-Link will continue to operate as an industry leader in connecting
`people to one another.
`
`ROGER KAO
`Chairman & CEO
`
`A.P. CHEN
`President
`
`2 | D-Link Corporation | Annual Report 2014
`
`D-Link Corporation | Annual Report 2014 | 3
`
`Chrimar Systems, Inc.
`Exhibit 2038-3
`IPR2016-01426 USPN 9,019,838
`
`

`
`Globalization
`through Localization
`
`LOCAL MARKET UNDERSTANDING, INTERNATIONAL PRESENCE
`Unity: a strategy for success executed on a global scale. D-Link is
`Confident in the resources of D-Link headquarters to develop and
`the worldwide leader and an award-winning designer, developer,
`deliver state-of-the-art networking solutions, each local business –
`and provider of Wi-Fi and Ethernet networking, broadband,
`regardless of its location around the world – effectively penetrates
`multimedia, voice and data communications, and digital
`the market. The Company’s innovative products provide solutions
`electronics solutions. D-Link has systematically expanded its
`for home and businesses, each built with standards-based
`market share by penetrating geographic targets through a strategy
`reliability. D-Link has become a trusted international brand that
`of establishing in-country business units supported by a strong
`connects people to their lives, to their work, and to each other.
`corporate foundation.
`
`London, U.K.
`
`Moscow, Russia
`
`Beijing, China
`
`Fountain Valley, U.S.A.
`
`São Paulo, Brazil
`
`Taipei, Taiwan
`D-Link Global Headquarters
`
`Singapore
`
`4 | D-Link Corporation | Annual Report 2014
`
`D-Link Corporation | Annual Report 2014 | 5
`
`Chrimar Systems, Inc.
`Exhibit 2038-4
`IPR2016-01426 USPN 9,019,838
`
`

`
`equipment and test beds, D-Link is able to
`develop products according to the unique
`technical and aesthetic requirements
`of leading federal and regional Internet
`providers, affording them a tremendous
`amount of flexibility.
`
`D-Link is also transitioning from FOB (Free On
`Board) supply schemes to DDP (Delivery Duty
`Paid) in Russia. For this purpose, a production
`and logistics center has been constructed in
`Ryazan. By producing products locally, we
`will be allowed to participate in the state
`import substitution program (a cornerstone
`of Russia’s plan to improve economic
`conditions) and thus secure our leadership
`position in the region.
`
`As in Russia, the macroeconomic situation
`in Brazil, Latin America’s most important
`market, also worsened significantly in 2014.
`Growth slowed from 2.7% in 2013 to just 0.1%
`in 2014. Still, the IT market in Brazil is the
`7th largest in the world and enjoyed US$ 60
`billion in investments, a growth of 6.7% YoY.
`
`D-Link’s total revenue in Brazil grew by
`15% YoY, and the company showed strong
`per formance in the telecom ser vice
`provider segment. The retail segment also
`grew significantly as we strove to position
`ourselves as an added value company,
`supported by marketing services and
`innovative new products such as our Wi-Fi
`Baby Cameras and 11AC routers.
`
`The DIR-615 router was one of the most
`impor tant produc ts in the countr y,
`responsible for D-Link’s share of the N300
`market rising from nearly 0% in 2013 to
`27% in 2014, second only to Link One. And
`by re-positioning the DIR-505 and 503
`primarily as “repeaters” (devices that repeat
`wireless signals to extend range) rather than
`personal routers, retailers were able to sell
`substantially more of them.
`
`Although emerging markets continued to
`pose significant challenges to multinational
`firms in 2014, D-Link was able to pursue
`many unique local initiatives. Through
`increased product differentiation and a
`strong emphasis on “glocalization”, D-Link
`drove demand for cutting edge, custom-
`tailored products in multiple regions, all
`while planting the seeds of future growth.
`
`CASE STUDY: AIRTEL
`Bharti Airtel Limited is a leading global telecommunications company with operations
`in 20 countries across Asia and Africa. The company ranks among the top 4 mobile
`service providers globally by number of subscribers. The company’s product offerings
`include 2G, 3G, and 4G wireless services, mobile commerce, fixed line services, high-
`speed DSL broadband, IPTV, DTH, and enterprise services that include national and
`international long distance services to carriers. When Airtel began looking to bundle
`a new line of ADSL routers for their subscribers, D-Link was committed to providing
`them the best possible solution.
`
`The telecom sector in India is highly competitive, dominated by existing hardware
`providers like Beetel and Binatone. The evaluation process is time-consuming, and
`often ends with a reverse auction as competing companies try to underbid each
`other. Furthermore, telecom companies generally require a significant amount of
`customization in terms of firmware and special product feature development. All of
`these factors make it difficult for new players to enter the market.
`
`Differentiation was the key to D-Link’s successful bid. We offered a higher quality
`product at a better price point, and effectively leveraged our robust service support
`infrastructure and nationwide service reach. In addition – and perhaps most
`importantly – we were able to offer timely customization of firmware to suit the
`customer’s unique needs. The case clearly demonstrates the value and wisdom of our
`overarching global strategy: to think globally, but act locally.
`
`Emerging Markets, Asia-
`Pacific Region
`Despite an oftentimes difficult macroeconomic environment, D-Link was able to find
`new ways to win, particularly in India.
`
`Many emerging market economies sputtered in 2014. This turn
`for the worse was due to a variety of factors, including falling oil
`prices, political tensions, and the end of quantitative easing. Still,
`D-Link was able to find ways to grow.
`
`ecosystem in India. We have witnessed steady business growth for
`3G/4G products as the proliferation of Internet adoption fueled
`by handheld devices like mobile phones and tablets has led to
`increased demand for wireless products.
`
`In India, thanks to the much talked about Smart City project and
`the Digital India program, the computer networking industry is
`booming as government initiatives drive the digital economy
`forward. The emergence of an affluent middle class is triggering
`exponential growth in 3G/4G subscribers and broadband
`users, further accelerating demands for networking products
`from individual users. And as the size of business operations
`increases, large enterprises and SMBs are also investing in network
`infrastructure, resulting in huge business opportunities for
`networking vendors in the region.
`
`Sound business planning and strategic alliances have allowed
`D-Link to reach out to a wider customer network with a broader
`product portfolio and more expansive end-to-end solutions.
`Accordingly, D-Link’s growth was spectacular in India, with a
`net profit increase of over 60%, from Rs.135.83 million in 2013
`to Rs.218.58 million in 2014. With a unit shipment market share
`hovering around 50%, D-Link emerged as the undisputed leader
`of WLAN products in the region.
`
`Channel engagement has been a prime focus for D-Link, as
`channel/re-seller communities are an integral part of the business
`
`The government sector has also been a major business driver in
`India, and D-Link has won many substantial contracts. In addition,
`there has been strong demand for D-Link’s products from the
`education sector, as more and more campuses seek to modernize
`themselves with Wi-Fi and IP Camera surveillance solutions. Finally,
`partnerships with major telecom companies such as Airtel, Tata, and
`Hatchway have driven demand for D-Link’s ADSL routers and led to
`some big victories for the company in a highly competitive market.
`
`In 2014, Russia struggled economically due to falling oil prices,
`western sanctions imposed over the Ukraine crisis, and currency
`instability. Difficult economic conditions have changed the
`direction of market development, but have not restricted it. With
`brand presence in all the major Russian and CIS retail networks,
`33 offices in Russia and 15 in the CIS, and 24-7 technical support
`with after-sales service throughout the region, D-Link is still a major
`player in these markets, with sales of Internet gateways, routers, and
`switches producing the bulk of revenue in the region.
`
`The localization and customization of D-Link products for Russia
`and the CIS is a major focal point for company development in the
`region. By equipping the Russian R&D department with modern
`
`6 | D-Link Corporation | Annual Report 2014
`
`D-Link Corporation | Annual Report 2014 | 7
`
`Chrimar Systems, Inc.
`Exhibit 2038-5
`IPR2016-01426 USPN 9,019,838
`
`

`
`North America
`As the North American economic recovery accelerated, D-Link focused on improving
`product mix as it expanded into new retail and distribution channels.
`
`In 2014, D-Link was able to accomplish a great deal in the North
`American consumer, business, and service provider segments
`through market leadership in the Wi-Fi camera category,
`compelling new offerings in the growing Connected Home
`space, successful expansion into new retail spaces, and fruitful
`relationships with security integrators and IT solution providers.
`
`The D-Link Wi-Fi Baby Camera, a baby monitor for the modern
`parent, was a particularly successful product with consumers.
`Well-received within the influential “mommy blog” circuit, D-Link
`garnered numerous positive reviews and built legitimacy and
`perceived value among influential early adopters.
`
`On the home networking front, D-Link continued to drive
`awareness and sales of its AC Wi-Fi routers, which deliver next-
`level performance to users. The worldwide upgrade to AC
`routers is being driven by the inevitability of more and more
`users connecting more and more wireless devices to the Internet
`and to each other, including televisions, media players, game
`consoles, IP cameras, and even new Connected Home products
`such as D-Link Smart Plugs and Motion Sensors. By offering a
`range of 11AC Wi-Fi routers designed to meet different needs
`and price points, D-Link delivered both quality and value in a
`continued bid to capture more of the swelling 11AC market.
`
`In addition to maintaining a strong retail presence at Best
`Buy, D-Link expanded its Wi-Fi camera offerings at Staples and
`launched the Staples Connect Hub, a key piece of a growing
`Connected Home ecosystem. D-Link also established a strong
`
`shelf presence at Wal-Mart in 2014, offering a line of Day & Night
`and Pan & Tilt Wi-Fi Cameras for DIY simple home security and
`monitoring.
`
`D-Link continued to earn market share in the enterprise market,
`selling connectivity and surveillance solutions to businesses
`across a variety of vertical markets. With a complete set of
`complementary solutions including switching, wireless, IP
`surveillance, network security, and network storage products,
`D-Link was able to compete in a crowded marketplace and win
`projects on a consistent basis. With a growing base of security
`integrators and IT solution providers incentivized with competitive
`training and promotional programs, D-Link was better able to find
`businesses in need of infrastructure upgrades or builds. D-Link
`also continued to work with major service providers, providing
`their customers with an array of broadband solutions.
`
`D-Link utilized sophisticated marketing techniques to
`communicate to consumers across North America. With expanded
`campaigns that include banner ads, YouTube advertising,
`billboards, and search and display remarketing, the company
`has been developing and delivering compelling brand collateral
`across a wide range of engagement channels. Moving forward,
`D-Link will continue to push hard in the region, educating
`potential customers on how they can use our products to connect
`to what matters most to them from wherever they may be.
`
`CASE STUDY: KINGSTON PUBLIC SCHOOL DISTRICT; KINGSTON,
`OKLAHOMA
`Located in Kingston, Oklahoma, the Kingston Public School District has been serving local communities in for decades. Today, the
`district has more than 1,350 students in pre-K through 12th grade across four school campuses. Staffed by 150 employees, the
`district strives to offer quality education in a safe, secure environment.
`
`But the Kingston School District’s video surveillance infrastructure was behind the times, with a security system that only included
`handful of outdated Sony VGA analog cameras at the middle school with poor image quality and scant coverage.
`
`“Like every school, we had students doing silly things on campus, like fighting, smoking, or trying to do drugs in the bathroom,” said
`Bill Wolff, director of technology. “Those were all concerns, but beyond that, we wanted to deter vandalism. On one occasion, some
`out-of-town kids got on campus and did about $20,000–$30,000 worth of damage.”
`
`As pressure mounted to upgrade video surveillance, the district entertained a wide variety of potential products. Ultimately, D-Link
`was able to provide the best solution: a mix of 160 indoor/outdoor IP cameras, SAN storage, and video management software
`working in harmony to bolster campus security at a price far more reasonable than competitors could manage.
`
`“We learned that D-Link sells a great product for a much lower cost than some of the other big camera companies, so we had to
`ask, ‘Why spend a thousand more dollars per camera than we need to?’”
`
`After implementation, Kingston School District’s new IP surveillance system began deterring mischief right away. Wolff believes
`it has prevented numerous cases of vandalism, resulting in the district’s replacement/repair costs going down. And in terms of
`technical expertise, Wolff says D-Link’s support has been an invaluable.
`
`“I simply can’t put a price on that,” he said. “Without D-Link’s help and support—both before and after the sale—we would have
`probably been a mess, to be honest. Today, the system is running great and I haven’t had to even touch it in 18 months. From a
`technical director’s standpoint, it’s absolutely perfect.”
`
`8 | D-Link Corporation | Annual Report 2014
`
`D-Link Corporation | Annual Report 2014 | 9
`
`Chrimar Systems, Inc.
`Exhibit 2038-6
`IPR2016-01426 USPN 9,019,838
`
`

`
`Europe
`European economic recovery led to dramatic increases in IP surveillance solutions and
`consumer services
`
`In a year dominated by concerns over the future of the European
`single currency, plummeting oil prices and other deflationary
`pressures, D-Link Europe managed to maintain and grow sales
`momentum across the region throughout 2014. Overall business
`sales grew by just 0.22%, but that figure masks double-digit rises
`across some Central and Eastern European areas and a further
`strengthening of D-Link’s position as the market leader in video
`surveillance.
`
`Indeed, one highlight for the year came when the respected
`CONTEXT SalesWatch Distribution service put D-Link at the
`top of the European rankings for network and CCTV camera
`vendors, with an impressive 67.9% unit share. With global video
`surveillance equipment revenues expected to have risen to
`around €12bn ($16bn) in 2014, D-Link Europe continued to
`reinforce its commitment to this market with sales up 12.6% YoY.
`
`There was good news in the smart switch market as well. Our
`sales of smart switches grew by 26.8% last year in Europe,
`alongside a more modest, but not insignificant, 9.73% rise in
`the number of unmanaged switch sales. This was due in part
`to the introduction of a variety of new, even smarter products,
`including the DXS-3600 Series of 10 Gigabit smart switches.
`These switches offer a level of performance and low latency
`previously only available to large organizations, but at price
`points businesses of all sizes can manage. The release of high-
`powered PoE products also helped boost smart switch sales in
`2014, equipping D-Link Europe with one of the most complete
`and competitive switch portfolios available and paving the way
`toward further market share gains in the future.
`
`Storage sales continue to decline in the face of competition from
`cloud-based storage services and budget NAS appliances. In the
`business wireless market, however, D-Link Europe continues to
`perform well, growing sales by 7% year on year, falling just short
`of the 9% growth shown by the market as a whole.
`
`D-Link Europe teams continue to capitalize on market leadership
`within the home surveillance market, building on an incredible
`114% rise in the number of consumers registered with the mydlink
`Cloud remote management and alerting service during 2014,
`ably assisted by an 18% growth in the number of mydlink enabled
`camera sales across the European region.
`
`Looking forward, D-Link Europe is making a similar commitment
`to capitalize on the growing Internet of Things movement and
`assume leadership of the home automation market, this time on
`the back of the new mydlink Home software and our growing
`Connected Home product line. D-Link has already won a number
`of major projects with service providers to meet the demands of
`this new market, including entry-level surveillance services built
`around a range of cost-optimized D-Link cameras, plus packages
`based on Z-Wave and ZigBee home automation technologies.
`
`In summary, despite continued uncertainty over the future of the
`Euro, prospects for 2015 look good with growth expected across
`key video surveillance, smart switch, business Wi-Fi, and home
`automation sectors.
`
`CASE STUDY: CAMERAS SUPPORT A GREATER FOCUS ON SCHOOL
`SECURITY
`Founded in 1897, Helsby High School is a state-maintained secondary school based in Northwest Cheshire for pupils aged 11 to 18.
`It prides itself on high quality teaching in a safe learning environment.
`
`Security has always been paramount, but the school’s existing analog CCTV system, with its high maintenance costs and poor
`image quality, was in dire need of upgrade. The issue was further compounded by a growing awareness of places where the
`cameras were not functioning properly, which in turn had led to trouble zones.
`
`To address the challenge, the school’s ICT Manager, Steve Ford, turned to Rapid Technologies, a specialist education solutions
`provider and a trusted D-Link partner. D-Link was endorsed as the vendor of choice, the one best equipped to provide a complete
`surveillance solution and enhance the school’s overall infrastructure. Without disrupting the day-to-day operation of the school,
`some 72 of D-Link’s IP Surveillance cameras were installed.
`
`The new CCTV system immediately proved