HP 2013 Annual Report Download - page 18

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 our 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 $3.1 billion in fiscal 2013, $3.4 billion in fiscal
2012 and $3.3 billion in fiscal 2011. We anticipate that we will continue to have significant research and
development expenditures in the future to support the design and development 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 likely to be
incorporated into our products and services or where obtaining such proprietary rights will improve our
competitive position. At October 31, 2013, our worldwide patent portfolio included over 38,000 patents,
which represented a slight increase over the number of patents in our patent portfolio at the end of
fiscal 2012 and fiscal 2011.
Patents generally have a term of twenty years from the date they are filed. As our patent portfolio
has been built over time, the remaining terms of the individual patents across our patent portfolio vary.
We believe that our patents and patent applications are important for maintaining the competitive
differentiation of our products and services, enhancing our freedom of action to sell our products and
services in markets in which we choose to participate, and maximizing our return on research and
development investments. No single patent is in itself essential to HP as a whole or to any of HP’s
business segments.
In addition to developing our patent portfolio, we license intellectual property from third parties as
we deem appropriate. We have also granted and continue to grant to others licenses under our patents
when we consider these arrangements to be in our interest. These license arrangements include a
number of cross-licenses with third parties.
For a discussion of risks attendant to intellectual property rights, see ‘‘Risk Factors—Our revenue,
cost of sales, and expenses may suffer if we cannot continue to license or enforce the intellectual
property rights on which our business depends or if third-parties assert that we violate their intellectual
property rights,’’ in Item 1A, which is incorporated herein by reference.
Backlog
We believe that backlog is not a meaningful indicator of future business prospects due to our
diverse products and services portfolio, including the large volume of products delivered from shelf or
channel partner inventories and the shortening of product life cycles. Therefore, we believe that
backlog information is not material to an understanding of our overall business.
Seasonality
General economic conditions have an impact on our business and financial results. From time to
time, the markets in which we sell our products and services experience weak economic conditions that
may negatively affect sales. We experience some seasonal trends in the sale of our products and
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