EMC 2006 Annual Report Download - page 9

Table of Contents
Technology Alliances
We have technology alliances with leading software, networking and services companies. We intend to continue to form additional alliances. Our
strategy is to work closely with these and other companies to provide added value to our customers by integrating our solutions with software and networking
applications that customers rely on to manage their day-to-day business operations. In 2006, EMC expanded its major alliances with Microsoft Corporation
and Oracle Corporation.
Manufacturing and Quality
Our products are assembled and tested primarily at our facilities in the United States and Ireland or at global manufacturing service suppliers. See
Item 2 "Properties." We work closely with our suppliers to design, assemble and test product components in accordance with production standards and quality
controls established by us. Our software products are designed, developed and tested primarily at our facilities in the United States and abroad. The products
are tested to meet quality standards established by us.
We have implemented a formal, documented quality management system to ensure that our products and services satisfy customer needs and
expectations and to provide the framework for continual improvement of our processes and products. This system is certified to the ISO 9001 International
Standard. Several additional ISO 9001 certifications are maintained for sales and service operations worldwide. We have also implemented Six Sigma, Lean
Manufacturing and other quality methodologies to ensure that the quality of our designs, manufacturing, test processes and supplier relationships are
continually improved. Our storage systems manufacturing and test facilities in Massachusetts, North Carolina and Ireland are certified to the ISO 14001
International Standard for environmental management systems. We also maintain Support Center Practices ("SCP") certification for our primary customer
support centers. These internationally recognized endorsements of ongoing quality and environmental management are among the highest levels of
certifications available.
Raw Materials
We purchase many sophisticated components and products from one or a limited number of qualified suppliers, including some of our competitors. Our
products utilize industry-standard and semi-custom components and subsystems. Among the most important components that we use are disk drives, high
density memory components, microcontrollers 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 2006, 2005 and 2004, our
research and development ("R&D") expenses totaled $1,254.2 million, $1,004.8 million, and $847.9 million, respectively. We support our R&D efforts
through state-of-the-art development labs worldwide.
Backlog
We produce our products 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 deliver products shortly after receipt of the order. Service engagements are also included in certain
orders. Customers may reschedule or cancel orders with little or no penalty. 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 companies in the markets we serve, including companies that offer a broad spectrum of IT products and services and others that
offer specific information storage, content management, security or server virtualization products or services. We believe that most of these companies
compete based on their market presence, products, service or price. Some of these companies also compete by offering information storage, content
management or virtualization-related products or services, together with other IT products or services, at minimal or no additional cost in order to preserve or
gain market share.
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 quality, breadth of offerings, 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 information infrastructure-focused
direct sales force and a broad network of channel partners. We believe our advantages in service include our ability to provide our customers with a full range
of expertise before, during and after their purchase of solutions from us or other vendors.
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