Salesforce.com 2010 Annual Report Download - page 16

Table of Contents
ITEM 1A. RISK FACTORS
The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem
immaterial also may affect our results of operations, cash flows and financial condition.
Risks Related to Our Business and Industry
Defects or disruptions in our service could diminish demand for our service and subject us to substantial liability.
Because our service is complex and we have incorporated a variety of new computer hardware and software which is developed in-house and acquired
from third party vendors, our service may have errors or defects that users identify after they begin using it that could result in unanticipated downtime for our
subscribers and harm our reputation and our business. Internet-based services frequently contain undetected errors when first introduced or when new versions
or enhancements are released. We have from time to time found defects in our service and new errors in our existing service may be detected in the future. In
addition, our customers may use our service in unanticipated ways that may cause a disruption in service for other customers attempting to access their data.
Since our customers use our service for important aspects of their business, any errors, defects, disruptions in service or other performance problems with our
service could hurt our reputation and may damage our customers' businesses. If that occurs, customers could elect not to renew, or delay or withhold payment
to us, we could lose future sales or customers may make warranty or other claims against us, which could result in an increase in our provision for doubtful
accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation.
Interruptions or delays in service from our third-party data center hosting facilities could impair the delivery of our service and harm our business.
We currently serve our customers from third-party data center hosting facilities located in the United States and Singapore. Any damage to, or failure
of, our systems generally could result in interruptions in our service. As we continue to add data centers and add capacity in our existing data centers, we may
move or transfer our data and our customers' data. Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of
our service. Further, any damage to, or failure of, our systems generally could result in interruptions in our service. Interruptions in our service may reduce
our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions and adversely affect our renewal rates and our ability
to attract new customers. Our business will also be harmed if our customers and potential customers believe our service is unreliable.
As part of our current disaster recovery arrangements, our production environment and all of our customers' data is currently replicated in near real-time
in a facility located on the east coast of the United States. Companies and products added through acquisition may be temporarily served through alternate
facilities. We do not control the operation of any of these facilities, and they are vulnerable to damage or interruption from earthquakes, floods, fires, power
loss, telecommunications failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct.
Despite precautions taken at these facilities, the occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice
or other unanticipated problems at these facilities could result in lengthy interruptions in our service. Even with the disaster recovery arrangements, our
service could be interrupted.
If our security measures are breached and unauthorized access is obtained to a customer's data or our data or our information technology systems,
our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial
exposure and liabilities.
Our service involves the storage and transmission of customers' proprietary information, and security breaches could expose us to a risk of loss of this
information, litigation and possible liability. These security
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