Oracle 2011 Annual Report Download - page 18

In the United States, our sales and service employees are based in our headquarters and in field offices
throughout the country. Outside the United States, our international subsidiaries sell and support our products in
their local countries as well as within other foreign countries where we do not operate through a direct sales
subsidiary. Our geographic coverage allows us to draw on business and technical expertise from a global
workforce, provides stability to our operations and revenue streams to offset geography-specific economic trends
and offers us an opportunity to take advantage of new markets for our products. Our international operations
subject us to certain risks, which are more fully described in “Risk Factors” included in Item 1A. of this Annual
Report. A summary of our domestic and international revenues and long-lived assets is set forth in Note 16 of
Notes to Consolidated Financial Statements.
We also market our products worldwide through indirect channels. The companies that comprise our indirect
channel network are members of the Oracle Partner Network. The Oracle Partner Network is a global program
that manages our business relationships with a large, broad-based network of companies, including independent
software and hardware vendors, system integrators and resellers who deliver innovative solutions and services
based upon our products. By offering our partners access to our premier products, educational information,
technical services, marketing and sales support, the Oracle Partner Network program extends our market reach by
providing our partners with the resources they need to be successful in delivering solutions to customers globally.
The majority of our hardware systems products are sold through indirect channels, including independent
distributors and value added resellers. We have enhanced direct sales coverage for our hardware systems
products and intend that our direct sales force will sell proportionately more of our hardware systems products in
the future than they do currently.
Seasonality and Cyclicality
Our quarterly results reflect distinct seasonality in the sale of our products and services. Our total revenues and
operating margins are typically highest in our fourth fiscal quarter and lowest in our first fiscal quarter. General
economic conditions also have an impact on our business and financial results. The markets in which we sell our
products and services have, at times, experienced weak economic conditions that have negatively affected our
revenues. See “Selected Quarterly Financial Data” in Item 7 of this Annual Report for a more complete
description of the seasonality and cyclicality of our revenues, expenses and margins.
Competition
We face intense competition in all aspects of our business. The nature of the IT industry creates a competitive
landscape that is constantly evolving as firms emerge, expand or are acquired, as technology evolves and as
customer demands and competitive pressures otherwise change.
Our customers are demanding less complexity and lower total cost in the implementation, sourcing, integration
and ongoing maintenance of their enterprise software and hardware systems, which has led increasingly to our
product offerings being viewed as a “stack” of software and hardware designed to work together in a standards-
compliant environment. Our enterprise software and hardware offerings compete directly with some offerings
from the most competitive companies in the world, including Microsoft Corporation (Microsoft), International
Business Machines Corporation (IBM), Hewlett-Packard Company (HP), SAP AG, and Intel, as well as many
others. In addition, the low barriers to entry in many of our market segments regularly introduce new
technologies and new and growing competitors to challenge our offerings. Our competitors range from
companies offering broad IT solutions across many of our lines of business to vendors providing point solutions,
or offerings focused on a specific functionality, product area or industry. In addition, as we expand into new
market segments, we will face increased competition as we will compete with existing competitors, as well as
firms that may be partners in other areas of our business and other firms with whom we have not previously
competed. Moreover, we or our competitors may take certain strategic actions—including acquisitions,
partnerships and joint ventures, or repositioning of product lines—which invite even greater competition in one
or more product categories.
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