VMware 2010 Annual Report Download - page 10

Table of Contents
The VMware Technology Alliance Partner program facilitates joint solution creation and coordinated go-to-market activities with our
partners. Over 2,400 of the most widely used applications from ISVs support the VMware vSphere platform. Each month, dozens of additional
applications are added to the supported list. These applications include business solutions for enterprise resource planning, human resource
management, electronic medical records management, financial processing, and middleware such as application servers and databases. As an
extension to this rapidly growing list, we have expanded our VMware Ready Management program to allow middleware and application
software to qualify for the VMware Ready logo. The VMware Ready Management program validates the integrations of partner solutions that
simplify comprehensive management of VMware virtual datacenter operating system environments.
Our ISVs and other alliance partners, open source contributors and other VMware community members have distributed more than 1,500
software applications as virtual appliances. In addition to developing open APIs, formats and protocols at multiple levels in our products, we
provide source code access to select partners in our “Community Source”
program to facilitate joint development and partner differentiation. We
provide access to our ESX source code to approximately 600 developers from more than 40 partners for joint development projects. We also
work with our industry partners to promote and foster the adoption of industry standards.
We invest significant capital in testing and certification of infrastructure to rigorously ensure our software works well with major hardware
and software products. We have more than 4,500 servers, storage, I/O and thin-client devices from approximately 200 companies that are
VMware Ready. We have successfully tested approximately 500 operating system versions for use with our solutions. We believe that the scale
and scope of this effort is a significant competitive advantage.
Research and Development
We have made, and expect to continue to make, significant investments in research and development (“R&D”). We have assembled an
experienced group of developers with system level, systems management, desktop, security, application development and open source software
expertise. We also have strong ties to leading academic institutions around the world, and we support academic programs that range from shared
source code for research to sabbatical programs for visiting professors.
We prioritize our product development efforts through a combination of engineering-driven innovation and customer and market-driven
feedback. Our R&D culture places high value on innovation, quality and open collaboration with our partners. We currently participate in
numerous standards groups, and VMware employees hold a variety of standards organization leadership positions, including with the Distributed
Management Task Force, the Standard Performance Evaluation Corporation, the InterNational Committee for Information Technology Standards
(INCITS), the Storage Networking Industry Association and the OSGi Alliance. We believe that maintaining the strength of our R&D
organization is critical to our ability to compete.
Our R&D expenses totaled $653.0 million, $496.6 million and $429.2 million in 2010, 2009 and 2008, respectively.
Sales and Marketing
We sell and market our products largely through a network of channel partners, which includes distributors, resellers, system vendors and
systems integrators, with over 85% of our sales in 2010 derived from this network. The remainder is primarily derived from direct sales.
We have established ongoing business relationships with our distributors. Our distributors purchase software licenses and software support
from us for resale to end-user customers via resellers.
A substantial majority of our resellers obtain software licenses and software support from our distributors and market and sell them to our
end-user customers. These resellers are part of our VMware Partner Network (“VPN”), which offers these resellers sales and product training
and pricing incentives and rebates and access to the worldwide network of VMware distributors and the VMware Partner Central Web portal.
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