HP 2011 Annual Report Download - page 17

component inventory in anticipation of supply constraints or enter into longer-term pricing
commitments with vendors to improve the priority, price and availability of supply. See ‘‘Risk
Factors—We depend on third-party suppliers, and our revenue and gross margin could suffer if we fail
to manage suppliers properly,’’ in Item 1A, which is incorporated herein by reference.
International
Our products and services are available worldwide. We believe this geographic diversity allows us
to meet demand on a worldwide basis for both consumer and enterprise customers, draws on business
and technical expertise from a worldwide workforce, provides stability to our operations, allows us to
drive economies of scale, provides revenue streams to offset geographic economic trends and offers us
an opportunity to access new markets for maturing products. In addition, we believe that future growth
is dependent in part on our ability to develop products and sales models that target developing
countries. In this regard, we believe that our broad geographic presence gives us a solid base upon
which to build such future growth.
A summary of our domestic and international net revenue and net property, plant and equipment
is set forth in Note 19 to the Consolidated Financial Statements in Item 8, which is incorporated herein
by reference. Approximately 65% of our overall net revenue in fiscal 2011 came from outside the
United States. The substantial majority of our net revenue originating outside the United States was
from customers other than foreign governments.
For a discussion of risks attendant to HP’s foreign operations, see ‘‘Risk Factors—Due to the
international nature of our business, political or economic changes or other factors could harm our
future revenue, costs and expenses and financial condition,’’ in Item 1A, ‘‘Quantitative and Qualitative
Disclosure about Market Risk’’ in Item 7A and Note 10 to the Consolidated Financial Statements in
Item 8, which are incorporated herein by reference.
Research and Development
We remain committed to innovation as a key element of HP’s culture. Our development efforts
are focused on designing and developing products, services and solutions that anticipate customers’
changing needs and desires and emerging technological trends. Our efforts also are focused on
identifying the areas where we believe we can make a unique contribution and the areas where
partnering with other leading technology companies will leverage our cost structure and maximize our
customers’ experiences.
HP Labs, together with the various research and development groups within the five principal
business segments, are responsible for our research and development efforts. HP Labs is part of our
Corporate Investments segment.
Expenditures for research and development were $3.3 billion in fiscal 2011, $3.0 billion in fiscal
2010 and $2.8 billion in fiscal 2009. We anticipate that we will continue to have significant research and
development expenditures in the future to provide a continuing flow of innovative, high-quality
products and services to maintain and enhance our competitive position.
For a discussion of risks attendant to our research and development activities, see ‘‘Risk Factors—
If we cannot successfully execute on our strategy and continue to develop, manufacture and market
products, services and solutions that meet customer requirements for innovation and quality, our
revenue and gross margin may suffer,’’ in Item 1A, which is incorporated herein by reference.
Patents
Our general policy has been to seek patent protection for those inventions and improvements
likely to be incorporated into our products and services or where proprietary rights will improve our
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