Autodesk 2007 Annual Report Download - page 73

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2007 Annual Report
BACKLOG
We typically ship products shortly after receipt of an order, which is common in the software industry.
Our aggregate backlog is primarily comprised of deferred revenue. Deferred revenue consists primarily
of deferred maintenance revenue from our Subscription Program. To a lesser extent, deferred revenue
consists of deferred license and other revenue derived from Autodesk Buzzsaw services, consulting
services and deferred license sales. Backlog 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. Aggregate backlog was $395.8 million at January 31, 2007, of which $378.8 million
was deferred revenue and $17.0 million related to current software license product orders which had not
yet shipped at the end of the fiscal year. Aggregate backlog was $283.5 million at January 31, 2006, of which
$266.5 million was deferred revenue and $17.0 million related to current software license product orders
which had not yet shipped. Deferred revenue increased over the prior year primarily due to an increase in
deferred maintenance revenue resulting from the success of our Subscription Program, and we expect the
increase in deferred maintenance revenue to continue to increase in the future. We do not believe that
aggregate backlog as of any particular date is necessarily indicative of future results.
COMPETITION
The markets for our products are highly competitive and subject to rapid change. In addition, in each
of our markets, we compete with numerous regional and specialized software and services companies.
Our Design Solutions Segment competes with vendors that specialize primarily in one of the three
industry segments in which we compete. Our competitors range from large, global, publicly traded
software companies to small, geographically focused firms. Our primary global competitors in this
segment include Adobe Systems Inc., Dassault Systemes and its subsidiary SolidWorks Corporation,
Google Inc., Environmental Systems Research Institute, Inc. (ESRI), Intergraph Corporation, Nemetschek
AG, Parametric Technology Corporation, and UGS PLM Software, a global division of the Siemens AG, and
Bentley Systems, Inc.
Our Media and Entertainment Segment competes with a wide range of different companies from
large publicly-traded corporations to small private entities. Large organizations that produce products
that compete in some or all of our markets include Avid Technology, Adobe Systems Inc., Apple Computer
Inc., SONY and Thomson. The media and entertainment market is highly fragmented with complex
interdependencies between many of the larger corporations. As a result, some of our competitors also
own subsidiaries that are our clients or our partners in developing or bringing to market some of our
solutions.
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 is 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.
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, in
certain markets, some of our competitors have greater financial, technical, sales and marketing and other
resources.