VMware 2015 Annual Report Download - page 10

TableofContents
Large,diversifiedenterprisesoftwareandhardwarecompanies.Thesecompetitorssupplyawidevarietyofproductsandservicesto,andhavewell-
establishedrelationshipswith,ourcurrentandprospectiveendusers.Forexample,smalltomediumsizedbusinessesandcompaniesinemergingmarketsthatare
evaluatingtheadoptionofvirtualization-basedtechnologiesandsolutionsmaybeinclinedtoconsiderMicrosoftsolutionsbecauseoftheirexistinguseof
WindowsandOfficeproducts.Someofthesecompetitorshaveinthepastandmayinthefuturetakeadvantageoftheirexistingrelationshipstoengageinbusiness
practicesthatmakeourproductsandserviceslessattractivetoourendusers.Othercompetitorshavelimitedordeniedsupportfortheirapplicationsrunningin
VMwarevirtualizationenvironments.Inaddition,thesecompetitorscouldintegratecompetitivecapabilitiesintotheirexistingproductsandservicesandmake
themavailablewithoutadditionalcharge.Forexample,OracleprovidesfreeservervirtualizationsoftwareintendedtosupportOracleandnon-Oracleapplications,
andMicrosoftoffersitsownservervirtualizationsoftwarepackagedwithitsWindowsServerproductandoffersbuilt-invirtualizationintheclientversionof
Windows.Asaresult,existingandprospectiveVMwarecustomersmayelecttouseproductsthatareperceivedtobe“free”or“verylowcost”insteadof
purchasingVMwareproductsandservicesforcertainapplicationswheretheydonotbelievethatmoreadvancedandrobustcapabilitiesarerequired.
Companiesofferingcompetingplatformsbasedonopensourcetechnologies.Opensourcetechnologiesforvirtualization,containerizationandcloudplatforms
suchasXen,KVM,Docker,RocketandOpenStackprovidesignificantpricingcompetitionandenablecompetingvendorstoleveragetheseopensource
technologiestocompetedirectlywithourSDDCinitiative.Enterprisesandserviceprovidershaveshownsignificantinterestinbuildingtheirowncloudsbasedon
opensourceprojectssuchasOpenStack,andothercompanieshaveindicatedtheirintentiontoexpandofferingsofvirtualmanagementandcloudcomputing
solutionsaswell.Additionally,anumberofenterpriseIThardwarevendorshavereleasedsolutionsbasedonOpenStackincludingHP,IBMandCisco.
Otherindustryalliances.Manyofourcompetitorshaveenteredintoorextendedpartnershipsorotherstrategicrelationshipstooffermorecomprehensive
virtualizationandcloudcomputingsolutionsthantheyindividuallyhadoffered.Weexpectthesetrendstocontinueascompaniesattempttostrengthenormaintain
theirpositionsintheevolvingvirtualizationinfrastructureandenterpriseITsolutionsindustry.Thesealliancesmayresultinmorecompellingproductandservice
offeringsthanweoffer.
Ourpartnersandmembersofourdeveloperandtechnologypartnerecosystem.Wefacecompetitionfromourpartners.Forexample,thirdpartiescurrently
sellingourproductsandservicescouldbuildandmarkettheirowncompetingproductsandservicesormarketcompetingproductsandservicesofothervendors.
Additionally,asformerlydistinctsectorsofenterpriseITsuchassoftware-basedvirtualizationandhardware-basedserver,networkingandstoragesolutions
converge,wealsoincreasinglycompetewithcompanieswhoaremembersofourdeveloperandtechnologypartnerecosystem.Consequently,wemayfinditmore
difficulttocontinuetoworktogetherproductivelyonotherprojects,andtheadvantageswederivefromourecosystemcoulddiminish.
Intellectual Property
AsofDecember31,2015,approximately890patentsissuedbytheUnitedStatesPatentandTrademarkOfficehavebeengrantedorassignedtous.Wealso
havebeengrantedorassignedpatentsfromothercountries.Thesepatentscovervariousaspectsofourservervirtualizationandothertechnologies.Thegranted
UnitedStatespatentsexpirebeginningin2018,withthelatestpatentexpiringin2034.WealsohavenumerouspendingUnitedStatesprovisionalandnon-
provisionalpatentapplications,andnumerouspendingforeignandinternationalpatentapplications,thatcoverotheraspectsofourvirtualizationandother
technologies.
WehavefederaltrademarkregistrationsintheUnitedStatesfor“VMWARE,”“VMWORLD,”“VSPHERE,”“VMWAREVCLOUD,”“VMWAREVIEW,”
“VMOTION,”“HORIZON,”“AIRWATCH,”“VREALIZE,”“VFABRIC,”“VCLOUD,”“VMWARENSX”andnumerousothertrademarks.Wehavealso
registeredtrademarksinanumberofforeigncountries.
Werelyonacombinationofpatent,trademark,copyrightandtradesecretlawsintheUnitedStatesandotherjurisdictions,aswellasconfidentiality
proceduresandcontractualprovisionstoprotectourintellectualpropertyrightsandourbrand.
WeenforceourintellectualpropertyrightsintheUnitedStatesandanumberofforeigncountries.Despiteourefforts,thestepswehavetakentoprotectour
proprietaryrightsmaynotbeadequatetoprecludemisappropriationofourproprietaryinformationorinfringementofourintellectualpropertyrights,andour
abilitytopolicesuchmisappropriationorinfringementisuncertain,particularlyincountriesoutsideoftheUnitedStates.UnitedStatespatentfilingsareintended
toprovidetheholderwitharighttoexcludeothersfrommaking,using,offeringtosell,sellingorimportingintotheUnitedStatesproductscoveredbytheclaims
ofgrantedpatents.
OurgrantedUnitedStatespatents,andanyfuturepatents(totheextenttheyareissued),maybecontested,circumventedorinvalidatedinthefuture.
Moreover,therightsgrantedunderanyissuedpatentsmaynotprovideuswithproprietaryprotectionorcompetitiveadvantages,andwemaynotbeabletoprevent
thirdpartiesfrominfringingthesepatents.Therefore,theexacteffectofourpatentsandtheotherstepswehavetakentoprotectourintellectualpropertycannotbe
predictedwithcertainty.
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