Salesforce.com 2015 Annual Report Download - page 26

customer’s decision to use our services may be an enterprise-wide decision and, if so, these types of sales would
require us to provide greater levels of education regarding the use and benefits of our services, as well as
education regarding privacy and data protection laws and regulations to prospective customers with international
operations. In addition, larger customers may demand more customization, integration services and features. As a
result of these factors, these sales opportunities may require us to devote greater sales support and professional
services resources to individual customers, driving up costs and time required to complete sales and diverting our
own sales and professional services resources to a smaller number of larger transactions, while potentially
requiring us to delay revenue recognition on some of these transactions until the technical or implementation
requirements have been met.
Pricing and packaging strategies for enterprise and other customers for subscriptions to our existing and
future service offerings may not be widely accepted by other new or existing customers. Our adoption of such
new pricing and packaging strategies may harm our business.
For large enterprise customers, professional services may also be performed by a third party or a
combination of our own staff and a third party. Our strategy is to work with third parties to increase the breadth
of capability and depth of capacity for delivery of these services to our customers. If a customer is not satisfied
with the quality of work performed by us or a third party or with the type of services or solutions delivered, then
we could incur additional costs to address the situation, the profitability of that work might be impaired, and the
customer’s dissatisfaction with our services could damage our ability to obtain additional work from that
customer. In addition, negative publicity related to our customer relationships, regardless of its accuracy, may
further damage our business by affecting our ability to compete for new business with current and prospective
customers.
We have been and may in the future be sued by third parties for various claims including alleged
infringement of proprietary rights.
We are involved in various legal matters arising from the normal course of business activities. These may
include claims, suits, government investigations and other proceedings involving alleged infringement of third-
party patents and other intellectual property rights, and commercial, corporate and securities, labor and
employment, wage and hour, and other matters.
The software and Internet industries are characterized by the existence of a large number of patents,
trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of
intellectual property rights. We have received in the past and may receive in the future communications from
third parties, including practicing entities and non-practicing entities, claiming that we have infringed their
intellectual property rights.
In addition, we have been, and may in the future be, sued by third parties for alleged infringement of their
claimed proprietary rights. For example, during fiscal 2015, we received a communication from a large
technology company alleging that we infringed certain of its patents. While we continue to analyze this claim and
no litigation has been filed to date, there can be no assurance that this claim will not lead to litigation in the
future. Our technologies may be subject to injunction if they are found to infringe the rights of a third party or we
may be required to pay damages, or both. Further, many of our subscription agreements require us to indemnify
our customers for third-party intellectual property infringement claims, which would increase the cost to us of an
adverse ruling on such a claim.
The outcome of any claims or litigation, regardless of the merits, is inherently uncertain. Any claims and
lawsuits, and the disposition of such claims and lawsuits, whether through settlement or licensing discussions, or
litigation, could be time-consuming and expensive to resolve, divert management attention from executing our
business plan, result in efforts to enjoin our activities, lead to attempts on the part of other parties to pursue
similar claims and, in the case of intellectual property claims, require us to change our technology, change our
business practices, pay monetary damages or enter into short- or long-term royalty or licensing agreements.
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