Autodesk 2004 Annual Report Download - page 18

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specific uses. We offer several programs that provide marketing, sales, technical support and programming
tools to developers who develop add-on applications for our products.
BACKLOG
We typically ship products shortly after receipt of an order, which is common in the software industry.
Our backlog is primarily comprised of deferred revenue from our subscription program, but also includes
current software license product orders which have not yet shipped. The category of current software
license product orders which we have not yet shipped consists of orders from customers with approved
credit status for currently available license software products and may include both orders with current ship
dates and orders with ship dates beyond the current fiscal period. We typically experience temporarily
higher levels of this component of backlog for quarters in which we retire a release of AutoCAD, as we did
in the fourth quarter of fiscal 2004. Aggregate backlog at January 31, 2004 and January 31, 2003 was
approximately $159.2 million and $97.5 million, respectively. Although the backlog at the end of fiscal 2004
was higher than normal, we do not believe that backlog as of any particular date is indicative of future results.
COMPETITION
We compete with a variety of companies in different aspects of our business.
In our Design Solutions Segment, our primary global competitors include Dassault Systems and its
SolidWorks subsidiary, Parametric Technology Corporation, UGS PLM Solutions, Bentley Systems and ESRI.
In our Discreet Segment, our primary competitors include Avid Technology, Alias Systems (a division of
Silicon Graphics, Inc.) and Apple Computer.
In addition, in each of our markets, there are numerous regional and specialized software and services
companies, with which we compete.
The software industry has limited barriers to entry, and the availability of desktop computers with
continually expanding performance capacity at progressively lower prices contributes to the ease of market
entry. The design software market in particular is fairly mature and characterized by vigorous competition
in each of the vertical markets in which we compete, both by entry of competitors with innovative
technologies and by consolidation of companies with complementary products and technologies. In
addition, the availability of third-party application software is a competitive factor within all of our markets.
Because of these and other factors, competitive conditions in these industries are likely to continue to
intensify in the future. Increased competition could result in price reductions, reduced net revenues and
profit margins and loss of market share, any of which could harm our business. Furthermore, some of our
competitors have greater financial, technical, sales and marketing and other resources.
Webelieve that our future results depend largely upon our ability tooffer new products and to continue
to provide existing product offerings that compete favorably with respect to reliability, performance, ease
of use, range of useful features, continuing product enhancements, reputation, price and training.
INTELLECTUAL PROPERTY AND LICENSES
We protect our intellectual property through a combination of patents, copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions. Nonetheless, our intellectual property
rights may not be successfully asserted in the future or may be invalidated, circumvented or challenged. In
addition, the laws of various foreign countries where our products are distributed do not protect our
intellectual property rights to the same extent as U.S. laws. Our inability to protect our proprietary
information could harm our business.
From time to time, we receive claims alleging infringement of a third party’s intellectual property rights,
including patents. Litigation often becomes more likely in times of economic uncertainty. Disputes
involving our intellectual property rights or those of another party have in the past and may in the future
lead to, among other things, costly litigation or product shipment delays, which could harm our business.
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