Autodesk 2007 Annual Report Download - page 71

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2007 Annual Report
development teams or contractors in other local markets, particularly in our Singapore and Switzerland
offices. We generally translate and localize our products into French, Italian, German, Spanish, Japanese
and various Chinese dialects. We plan to increase our product development operations internationally
over the next several years. We believe that our ability to conduct research and development at various
locations throughout the world allows us to optimize product development and lower costs. However,
international development, whether conducted by us or independent developers on our behalf, involves
significant costs and challenges, including whether we can adequately protect our intellectual property
and derive significant revenue in areas such as emerging economies where software piracy is a substantial
problem.
The technology industry is characterized by rapid technological change in computer hardware,
operating systems and software, as well as changes in customer requirements and preferences. To keep
pace with these changes, we maintain an aggressive program of new product development to address
demands in the marketplace for our products. We dedicate considerable technical and financial resources
to research and development to further enhance our existing products and to create new products and
technologies. However, these investments may not result in sufficient revenue generation to justify their
costs or our competitors may introduce new products and services that achieve acceptance among our
current customers, either of which would likely adversely affect our competitive position.
Our software products are complex and, despite extensive testing and quality control, may contain
errors or defects. These defects or errors could result in corrective releases to our software products,
damage to our reputation, loss of revenues, an increase in product returns or lack of market acceptance
of our products, any of which would likely harm our business.
We actively recruit and hire experienced software developers and license and acquire complementary
software technologies and businesses. In addition, we actively collaborate with and support third-party
software developers who offer products that enhance and complement our products.
Independent firms and contractors perform some of our product development activities. Because
talented development personnel are in high demand, these independent firms and contractors may not
be able to provide development support to us in the future. In addition, we license some technology from
third parties. Use of this licensed technology may be restricted in ways that negatively affect our business
in the future. We may not be able to obtain and renew existing license agreements on favorable terms, if
at all, and any failure to do so would likely harm our business.
In addition, our business strategy has historically depended in part on our relationships with a
network of third-party developers who develop their own products that expand the functionality of our
software. Some third-party developers may elect to support other products or may experience disruption
in product development and delivery cycles or financial pressure during periods of economic downturn.
These disruptions could negatively impact these third-party developers and, in turn, end users, which
could harm our business.
MARKETING AND SALES
We sell our products and services in over 160 countries primarily through an indirect channel consisting
of distributors and resellers. To a lesser extent we also sell directly to customers who are primarily
large corporations. Our indirect channel model includes both a two-tiered distribution structure where
distributors sell to resellers and a one-tiered structure where Autodesk sells directly to resellers. We have
a network of approximately 1,700 resellers and distributors worldwide. In addition, over 2,900 developers
in the Autodesk Developer Network create interoperable products that further enhance the range of
integrated solutions available to our customers. For fiscal 2007, approximately 85% of our revenues were
derived from indirect channel sales through distributors and resellers and we expect that the majority of
our revenues will continue to be derived from indirect channel sales in the future. One distributor, Tech
Data Corporation and its affiliates, accounted for 12%, 11% and 12% of our net revenues for fiscal 2007,
2006 and 2005, respectively.