EMC 2003 Annual Report Download - page 8

certain areas of the world. These agreements, subject to certain terms and conditions, enable these companies to market and resell certain of our systems and
software. In 2003, we expanded our distribution capabilities through both new and enhanced partner and channel relationships. Also in 2003, as a result of our
acquisitions of LEGATO and Documentum, we established additional distribution relationships.
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Technology Alliances
We have technology alliances with leading software, networking and services companies. We intend to continue to form additional alliances. Our
strategy is to work closely with these and other companies to provide added value to our customers by integrating our solutions with software and networking
applications that customers rely on to manage their day-to-day business operations. In 2003, we extended our strategic business and technology partnership
with Microsoft Corporation to include integration of Windows storage technologies, new marketing and sales initiatives and new service and support
agreements. We also expanded our existing relationship with Cisco Systems, Inc. to deliver next generation SAN switching technology.
Manufacturing and Quality
Our information storage systems are assembled and tested primarily at our facilities in the United States and Ireland. See "Properties." We work closely
with our suppliers to design, assemble and test product components in accordance with production standards and quality controls established by us. Our
software products are designed, developed and tested primarily at our facilities in the United States and abroad. The products are tested to meet quality
standards established by us.
We employ a company-wide Total Quality Management and Continuous Improvement philosophy and have adopted Six Sigma and other quality
methodologies to ensure that the quality of our designs, manufacturing, test processes and supplier relationships follow the same methodologies. Our
manufacturing and test facilities in Massachusetts, North Carolina and Ireland are certified to ISO 9001, the International Standard for quality management
systems. We also hold 14 additional certifications worldwide covering ISO 9001, the ISO 14001 Environmental Management System Standard and Support
Center Practices (SCP) certification for our customer support centers. These internationally recognized endorsements of ongoing quality management
represent the highest levels of certifications available.
Raw Materials
We purchase many sophisticated components and products from one or a limited number of qualified suppliers, including some of our competitors. Our
products utilize industry-standard and semi-custom components and subsystems. Among the most important components that we use are disk drives, high
density memory components and power supplies. While such components are generally available, we have experienced delivery delays from time to time
because of high industry demand or the inability of some vendors to consistently meet our quality or delivery requirements.
Research and Development
We continually enhance our existing products and develop new products to meet changing customer requirements. In 2003, 2002 and 2001, our research
and development expenses totaled $718.5 million, $781.5 million and $928.7 million, respectively. We support our research and development efforts through
state-of-the art development labs worldwide, including in Massachusetts, California, Maryland, North Carolina, Belgium, India and Ireland.
Backlog
We manufacture our systems on the basis of our forecast of near-term demand and maintain inventory in advance of receipt of firm orders from
customers. We configure to customer specifications and generally ship systems shortly after receipt of the order. Customers may reschedule or cancel orders
with little or no penalty. For these reasons, we believe that our backlog at any particular time is not meaningful because it is not necessarily indicative of
future sales levels.
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Competition
We compete with many companies in the markets we serve, certain of which offer a broad spectrum of IT products and services and others which offer
specific information storage or management products or services. We believe that most of these companies compete based on their market presence, products,
services or price. Certain of these companies also compete by offering storage-related products or services, together with other IT products or services, at
minimal or no additional cost in order to preserve or gain market share.
We believe that we have a number of competitive advantages over these companies, including product, distribution and service. We believe the
advantages in our products include quality, breadth of offerings, performance, functionality, scalability, availability, interoperability, connectivity, time to
market enhancements and total value of ownership. We believe our advantages in distribution include the world's largest storage-focused direct sales force
and our broad network of channel partners. We believe our advantages in service include our ability to provide our customers a full range of expertise before,
during and after their purchase of information lifecycle management solutions from us or other storage vendors.
Seasonality
Although we do not consider our business to be highly seasonal, we generally experience the greatest demand for our products and services in the last
quarter of the year.