Autodesk 2011 Annual Report Download - page 85

Our strategy to develop and introduce new product and service offerings, including new product features,
exposes us to risks such as limited customer acceptance, costs related to product defects and large
expenditures that may not result in additional net revenue.
Rapid technological changes, as well as changes in customer requirements and preferences, characterize the
software industry. We devote significant resources to the development of new technologies, such as our vertical
design products and our digital prototyping and collaboration products. In addition, we frequently introduce new
business models or methods that require a considerable investment of technical and financial resources such as an
increase in our portfolio of, and focus on, Suites. We are making such investments through further development
and enhancement of our existing products, as well as through acquisitions of new product lines. Such investments
may not result in sufficient revenue generation to justify their costs, or competitors may introduce new products
and services that achieve acceptance among our current customers, adversely affecting our competitive position.
In particular, a critical component of our growth strategy is to have customers of our AutoCAD and
AutoCAD LT products expand their portfolios to include our related vertical design products and our model-
based design products and our Suites. Over time, we aim to migrate customers using standalone Autodesk
products to expand their portfolio with our Suites offerings. Should sales of licenses of our AutoCAD and
AutoCAD LT or standalone Autodesk products decrease without a corresponding increase in vertical design and
model-based design product revenue or without purchases of customer seats to our vertical design products and
model-based design products or Suites, our results of operations will be adversely affected. Additionally, the
software products we offer are complex, and despite extensive testing and quality control, may contain errors or
defects. These errors or defects could result in the need for corrective releases to our software products, damage
to our reputation, loss of revenue, an increase in product returns or lack of market acceptance of our products,
any of which would likely harm our business.
Further, given the rapid speed of changing customer expectations and advancement of technology inherent
in the software industry, the extensive and complex efforts required to create useful and widely accepted
products and the rapid evolution of cloud computing, mobile devices, new computing platforms and other
technologies, our executive management team must act quickly, continuously and with vision. Although we have
articulated a strategy that we believe will fulfill these challenges, if we fail to execute properly on that strategy,
adapt that strategy as market conditions evolve, fail to internalize and execute on that strategy, we may fail to
meet our customers’ expectations, fail to compete with our competitors’ products and technology and lose the
confidence of our channel partners and employees. This in turn could adversely affect our business and financial
performance.
From time to time we introduce new business and sales initiatives; if we fail to successfully execute and
manage these initiatives, our results of operations could be negatively impacted.
As part of our effort to accommodate our customers’ needs and demands and the rapid evolution of
technology, we from time to time evolve our business and sales initiatives such as our expanding portfolio of
Suites. We may take such actions without clear indications that they will prove successful. Market acceptance of
any new business or sales initiative is dependent on our ability to match our customers’ needs at the right time
and price. Often we have limited prior experience and operating history in these new areas of emphasis. If any of
our assumptions about expenses, revenue or revenue recognition principles from these initiatives proves
incorrect, our actual results may vary materially from those anticipated, and our financial results will be
negatively impacted.
If we are not able to adequately protect our proprietary rights, our business could be harmed.
We rely on a combination of patent, copyright and trademark laws, trade secret protections, confidentiality
procedures and contractual provisions to protect our proprietary rights. Despite such efforts to protect our
proprietary rights, unauthorized parties from time to time have copied aspects of our software products or have
obtained and used information that we regard as proprietary. Policing unauthorized use of our software products
is time-consuming and costly. While we have recovered some revenue resulting from the unauthorized use of our
software products, we are unable to measure the extent to which piracy of our software products exists and we
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