EMC 2007 Annual Report Download - page 10

Distribution Channels
We market our products through direct sales and through multiple distribution channels. We have a direct sales presence throughout North America,
Latin America, Europe, the Middle East, South Africa and the Asia Pacific region. We also have agreements in place with many distributors, systems
integrators, resellers and OEMs. These agreements, subject to certain terms and conditions, enable these companies to market and resell certain EMC systems
and software.
Additionally, VMware has a multi-channel distribution model to expand its presence and reach various segments of the market. VMware derives a
significant majority of its revenues from its large indirect sales channel of nearly 10,000 channel partners that include distributors, resellers, x86 system
vendors and systems integrators.
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 2007, EMC expanded its partner ecosystem in international markets,
strengthening existing relationships and forging new ones with major global technology providers, including NEC and Wipro. VMware works closely with
over 200 technology partners, including leading server, processor, storage, networking and software vendors.
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 our quality standards.
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 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 2007, 2006 and 2005, our research
and development ("R&D") expenses totaled $1,526.9 million, $1,254.2 million and $1,004.8 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.
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