Dell 2011 Annual Report Download - page 20

Table of Contents
convenience or non-appropriation. In addition, if we violate legal or regulatory requirements, the applicable government could suspend or disbar us as a
contractor, which would unfavorably affect our net revenue and profitability.
•Our business could suffer if we do not develop and protect our own intellectual property or do not obtain or protect licenses to intellectual property
developed by others on commercially reasonable and competitive terms.
If we or our suppliers are unable to develop or protect desirable technology or technology licenses, we may be prevented from marketing products, could be
forced to market products without desirable features, or could incur substantial costs to redesign products, defend or enforce legal actions, or pay damages.
Although our suppliers might be contractually obligated to obtain or protect such licenses and indemnify us against related expenses, those suppliers could be
unable to meet their obligations. Similarly, we invest in research and development and obtain additional intellectual property through acquisitions, but these
activities do not guarantee that we will develop or obtain intellectual property necessary for profitable operations. Costs involved in developing and protecting
rights in intellectual property may have a negative impact on our business. In addition, our operating costs could increase because of copyright levies or
similar fees by rights holders and collection agencies in European and other countries.
•Infrastructure disruptions could harm our business.
We depend on our information technology and manufacturing infrastructure to achieve our business objectives. A disruption of our infrastructure could be
caused by a natural disaster, manufacturing failure, telecommunications system failure, or defective or improperly installed new or upgraded business
management systems. Portions of our IT infrastructure also may experience interruptions, delays, or cessations of service or produce errors in connection with
systems integration or migration work that takes place from time to time. In the event of any such disruption, we may be unable to receive or process orders,
manufacture and ship products in a timely manner, or otherwise conduct our business in the normal course. Moreover, portions of our services business
involve the processing, storage, and transmission of data, which would also be negatively affected by such an event. A disruption of our infrastructure could
cause us to lose customers and revenue, particularly during a period of heavy demand for our products and services. We also could incur significant expense
in repairing system damage and taking other remedial measures.
•We could suffer a loss of revenue and increased costs, exposure to significant liability, reputational harm, and other serious negative consequences
if we sustain cyber attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential
information about us or our customers or other third-parties.
We manage and store various proprietary information and sensitive or confidential data relating to our operations. In addition, our outsourcing services and
cloud computing businesses routinely process, store, and transmit large amounts of data for our customers, including sensitive and personally identifiable
information. We may be subject to breaches of the information technology systems we use for these purposes. Experienced computer programmers and
hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third-parties, create system
disruptions, or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software
programs that attack our products or otherwise exploit any security vulnerabilities of our products. In addition, sophisticated hardware and operating system
software and applications that we produce or procure from third-parties may contain defects in design or manufacture, including "bugs" and other problems
that could unexpectedly interfere with the operation of the system.
The costs to us to eliminate or address the foregoing security problems and security vulnerabilities before or after a cyber incident could be significant. Our
remediation efforts may not be successful and could result in interruptions, delays, or cessation of service, and loss of existing or potential customers that may
impede our sales, manufacturing, distribution, or other critical functions. We could lose existing or potential customers for outsourcing services or other
information technology solutions in connection with any actual or perceived security vulnerabilities in our products. In addition, breaches of our security
measures and the unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers or other third-parties, could
expose us, our customers, or other third-parties affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage
our brand and reputation, or otherwise harm our business. In addition, we rely in certain limited capacities on third-party data management providers whose
possible security problems and security vulnerabilities may have similar effects on us.
We are subject to laws, rules, and regulations in the U.S. and other countries relating to the collection, use, and
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