Citrix 2007 Annual Report Download - page 29

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hypervisor, which is the heart of the XenServer virtualization product. If these programmers fail to adequately
further develop and enhance open source technologies, we would have to rely on other parties to develop and
enhance the Xen hypervisor or we would need to develop and enhance the Xen hypervisor with our own
resources. We cannot predict whether further developments and enhancements to these technologies would be
available from reliable alternative sources. In either event, our development expenses could be increased and our
product release and upgrade schedules could be delayed. Moreover, if third party software programmers fail to
adequately further develop and enhance the Xen hypervisor, the development and adoption of this virtual server
technology could be stifled and our products, including XenServer, could become less competitive. Delays in
developing, completing or shipping new or enhanced products could result in delayed or reduced revenue for
those products and could also adversely affect customer acceptance of those offerings.
We are subject to risks associated with our strategic and technology relationships.
Our business depends on strategic and technology relationships. We cannot assure you that those
relationships will continue in the future. In addition to our relationship with Microsoft, we rely on strategic or
technology relationships with such companies as Dell Inc., Hewlett-Packard Company, International Business
Machines Corporation, SAP and others. We depend on the entities with which we have strategic or technology
relationships to successfully test our products, to incorporate our technology into their products and to market
and sell those products. We cannot assure you that we will be able to maintain our current strategic and
technology relationships or to develop additional strategic and technology relationships. If any entities in which
we have a strategic or technology relationship are unable to incorporate our technology into their products or to
market or sell those products, our business, results of operations and financial condition could be materially
adversely affected.
If we lose access to third party licenses, releases of our products could be delayed.
We believe that we will continue to rely, in part, on third party licenses to enhance and differentiate our
products. Third party licensing arrangements are subject to a number of risks and uncertainties, including:
• undetected errors or unauthorized use of another person’s code in the third party’s software;
• disagreement over the scope of the license and other key terms, such as royalties payable;
• infringement actions brought by third party licensees; and
• termination or expiration of the license.
If we lose or are unable to maintain any of these third party licenses or are required to modify software
obtained under third party licenses, it could delay the release of our products. Any delays could have a material
adverse effect on our business, results of operations and financial condition.
Our success depends on our ability to attract and retain and further penetrate large enterprise customers.
We must retain and continue to expand our ability to reach and penetrate large enterprise customers by
adding effective channel distributors and expanding our consulting services. Our inability to attract and retain
large enterprise customers could have a material adverse effect on our business, results of operations and
financial condition. Large enterprise customers usually request special pricing and generally have longer sales
cycles, which could negatively impact our revenues. By granting special pricing, such as bundled pricing or
discounts, to these large customers, we may have to defer recognition of some or all of the revenue from such
sales. This deferral could reduce our revenues and operating profits for a given reporting period. Additionally, as
we attempt to attract and penetrate large enterprise customers, we may need to increase corporate branding and
marketing activities, which could increase our operating expenses. These efforts may not proportionally increase
our operating revenues and could reduce our profits.
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