EMC 2002 Annual Report Download - page 10

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Table of Contents
components and subsystems. Among the most important components that we use are disk drives, high density memory components and power supplies.
While such components are generally available, we have experienced delivery delays from time to time because of high industry demand or the inability of
some vendors to consistently meet our quality or delivery requirements.
Research and Development
We continually enhance our existing products and develop new products to meet changing customer requirements. In 2002, 2001 and 2000, our
research and development expenses totaled $781.5 million, $928.7 million and $783.2 million, respectively.
Backlog
We manufacture our systems on the basis of our forecast of near-term demand and maintain inventory in advance of receipt of firm orders from
customers. We configure to customer specifications and generally ship systems shortly after receipt of the order. Customers may reschedule or cancel orders
with little or no penalty. For these reasons, we believe that our backlog at any particular time is not meaningful because it is not necessarily indicative of
future sales levels.
Competition
We compete with many established companies in the markets we serve. We believe that most of these companies compete based on their overall market
presence and their ability to address customers' broad information technology requirements. Certain of these companies also compete by offering information
storage products or services, together with other products or services, at minimal or no additional cost in order to preserve or gain market share. We also
compete with many smaller, less established companies in specific product segments.
We believe that we have a number of competitive advantages over these companies, including product, distribution and service. We believe the
advantages in our products include performance, functionality, scalability, availability, interoperability, connectivity, time to market enhancements and total
value of ownership. We believe our advantages in distribution include the world's largest storage-focused direct sales force and our broad network of channel
partners. We believe our advantages in service include our ability to provide our customers with a complete set of storage service solutions, encompassing
both professional services and customer service for our information storage systems and software.
Seasonality
Although we do not consider our business to be highly seasonal, we generally experience the greatest demand for our products and services in the last
quarter of the year.
Intellectual Property
We generally rely on patent, copyright, trademark and trade secret laws and contract rights to establish and maintain our proprietary rights in our
technology and products. While our intellectual property rights are important to our success, we believe that our business as a whole is not materially
dependent on any particular patent, trademark, license or other intellectual property right.
We have been granted or own by assignment approximately 700 patents issued by, and have over 600 patent applications pending with, the U.S. Patent
and Trademark Office, as well as a corresponding number of international patents and patent applications. While the duration of our patents varies, we believe
that the duration of our patents is adequate relative to the expected lives of our products.
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