VMware 2010 Annual Report Download - page 4

Table of Contents
PART I
Overview
VMware, Inc. is the leading provider of virtualization and virtualization-based cloud infrastructure solutions from the desktop to the data
center and to the cloud. Our virtualization solutions reflect a pioneering approach to computing that separates application software from the
underlying hardware to achieve significant improvements in efficiency, agility, availability, flexibility and manageability. Our broad and proven
suite of virtualization solutions addresses a range of complex information technology (“IT”) problems that include cost and operational
inefficiencies, facilitating access to “cloud computing” capacity, business continuity, software lifecycle management, and corporate end-user
computing device management. The benefits to our customers include substantially lower IT costs, cost-effective high availability across a wide
range of applications, and a more automated and resilient systems infrastructure capable of responding dynamically to variable business
demands. Our customers’ deployments range in size from a single virtualized server for small businesses to up to thousands of virtual machines
for our Fortune 1000 enterprise customers. Our solutions enable organizations to aggregate multiple servers, storage infrastructure and networks
together into shared pools of capacity that can be allocated dynamically, securely and reliably to applications as needed, increasing hardware
utilization and reducing spending. Once created, these internal computing infrastructures, or “clouds”, can be dynamically linked by our
customers to external computing resources from third-party cloud computing providers that run on a common VMware virtualization platform.
The result is a “hybrid” computing cloud of highly available internal and external computing resources that organizations can access on demand.
In the twelve years since the introduction of our first virtualization platform, we have expanded our product offerings to address distributed and
heterogeneous infrastructure challenges such as planned and unplanned downtime management, system recoverability and reliability, backup and
recovery, resource provisioning and management, capacity and performance management and security.
We work closely with more than 1,700 technology partners, including leading server, microprocessor, storage, networking and software
vendors. We have shared the economic opportunities surrounding virtualization with our partners by facilitating solution development through
open Application Programming Interface (“APIs”) formats and protocols and providing access to our source code and technology. The
endorsement and support of our partners have further enhanced the awareness, reputation and adoption of our virtualization solutions.
We have developed a multi-channel distribution model to expand our presence and reach various segments of the market. We derive a
significant majority of our revenues from our large indirect sales channel that include distributors, resellers, system vendors and systems
integrators. We believe that our partners benefit greatly from the sale of our solutions through additional services, software and hardware sales
opportunities. We have trained a large number of partners and end-users to deploy and leverage our solutions.
We were incorporated as a Delaware corporation in 1998 and continued to operate in large measure as a stand-alone company following
our acquisition by EMC Corporation (“EMC”) in 2004 and following our initial public offering of our Class A common stock in August 2007.
EMC holds approximately 80% of our outstanding common stock, including 33 million shares of our Class A common stock and all of our Class
B common stock, and we are considered a “controlled company” under the rules of the New York Stock Exchange. Total revenues in 2010
increased 41% to $2,857.3 million. This included license revenues of $1,401.4 million and services revenues of $1,455.9 million. In the years
ended December 31, 2010, 2009 and 2008, our license revenues came primarily from sales of our Cloud Infrastructure solutions. The balance of
our license revenues came from our other solutions: Cloud Application Platform, End-User Computing, and Virtualization and Cloud
Management. Of our total services revenues in 2010, 84% were software maintenance revenues and 16% were professional services revenues,
including training. For additional financial information on our business by product and geographic area, see Note N to the consolidated financial
statements included elsewhere in this filing. Our corporate headquarters are located at 3401 Hillview Avenue, Palo Alto, California and we have
97 offices worldwide.
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ITEM 1.
BUSINESS