Autodesk 2013 Annual Report Download - page 80

PRODUCT DEVELOPMENT AND INTRODUCTION
The technology industry is characterized by rapid technological change in computer hardware, operating systems and
software. In addition, our customers’ requirements and preferences rapidly evolve, as do their expectations of the performance
of our software. To keep pace with these changes, we maintain a vigorous program of new product development to address
demands in the marketplace for our products. Just as the transition from mainframes to personal computers transformed the
industry thirty years ago, we believe our industry is undergoing a similar transition from the personal computer to cloud, social,
and mobile computing.
We dedicate considerable technical and financial resources to research and development to further enhance our existing
products and to create new products and technologies. Research and development expenditures were $600.0 million or 26% of
fiscal 2013 net revenue, $566.5 million or 26% of fiscal 2012 net revenue and $496.2 million or 25% of fiscal 2011 net
revenue. Our software is primarily developed internally; however, we also use independent firms and contractors to perform
some of our product development activities. Additionally, we acquire products or technology developed by others by
purchasing or licensing products and technology from third parties. We continually review these investments in an effort to
ensure that we are generating sufficient revenue or gaining a competitive advantage to justify their costs.
The majority of our research and product development is performed in the United States, China, Singapore and Canada.
However, we employ experienced software developers in many of our other locations. Translation and localization of our
products are performed in a number of local markets, principally Singapore and Switzerland. We generally localize and
translate our products into German, French, Italian, Spanish, Russian, Japanese, Korean and simplified and traditional Chinese.
We plan to continue to manage significant 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, lower costs and integrate local market knowledge into our development activities. We continually assess
the significant costs and challenges, including intellectual property protection, against the benefits of our international
development activities.
In addition, our business and our customers benefit from our relationships with a network of over 3,900 third-party
developers who develop and sell their own products that further enhance the range of integrated solutions available to our
customers.
For further discussion regarding risks from our product development and introduction efforts, see Item 1A, “Risk
Factors.”
MARKETING AND SALES
We license or sell our products and services globally, primarily through indirect channels consisting of distributors and
resellers. To a lesser extent we also transact directly with 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 2,400 resellers and distributors worldwide. For fiscal
2013, approximately 83% of our revenue was derived from indirect channel sales through distributors and resellers, and we
expect that the majority of our revenue will continue to be derived from indirect channel sales in the future. We employ a
variety of incentive programs and promotions to align our reseller channel with our business strategies. Sales through our
largest distributor, Tech Data Corporation and its affiliates, accounted for 23%, 17% and 16% of our net revenue for fiscal years
2013, 2012 and 2011, respectively. On October 27, 2011, Tech Data purchased certain assets of Mensch and Maschine Software
(“MuM”), which has been a distributor of our products in Europe. The acquisition concentrates additional sales through Tech
Data, which on a consolidated basis would have accounted for 21% and 22% of our net revenue for fiscal years 2012 and 2011,
respectively, if the acquisition had taken place at the beginning of fiscal 2011. We believe our business is not substantially
dependent on Tech Data, including following the acquisition of certain assets of MuM. Our customers through Tech Data are
the resellers and end users who purchase our software licenses and services. Should any of the agreements between us and Tech
Data be terminated for any reason, we believe the resellers and end users who currently purchase our products through Tech
Data would be able to continue to do so under substantially the same terms from one of our many other distributors without
substantial disruption to our revenue. No other distributor or reseller accounted for 10% or more of our revenue.
Our customer-related operations are divided into three geographic regions, the Americas; Europe, Middle East and Africa
(“EMEA”); and Asia Pacific (“APAC”). Each geographic region is supported by global marketing and sales organizations.
These organizations develop and manage overall marketing and sales programs and work closely with a network of domestic
and international sales offices. Fiscal 2013 net revenue in the EMEA, Americas and APAC was $868.5 million (38%), $836.2
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