VMware 2007 Annual Report Download - page 5

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Table of Contents
PART I
VMware is the leading provider of virtualization solutions from the desktop to the data center. Our virtualization solutions represent a
pioneering approach to computing that separates the operating system and application software from the underlying hardware to achieve
significant improvements in efficiency, availability, flexibility and manageability. Our broad and proven suite of virtualization solutions
addresses a range of complex IT problems that include infrastructure optimization, business continuity, software lifecycle management and
desktop management. The benefits to our customers include substantially lower IT costs, choice of operating systems and a more automated and
resilient systems infrastructure capable of responding dynamically to variable business demands. Our customer base includes organizations of all
sizes across numerous industries and includes 100% of the Fortune 100 and approximately 90% of the Fortune 1,000.
Our solutions enable organizations to aggregate multiple servers, storage infrastructure and networks together into shared pools of capacity
that can be allocated dynamically, securely and reliably to applications as needed, increasing hardware utilization and reducing spending. In the
nine years since the introduction of our first virtualization platform, we have expanded our offering with virtual infrastructure automation and
management products to address distributed and heterogeneous infrastructure challenges such as system recoverability and reliability, backup
and recovery, resource provisioning and management, capacity and performance management and desktop security.
We began shipping our first product in 1999, and today we offer 21 products. Our flagship desktop product, VMware Workstation, is in its
sixth generation and our flagship server product suite, VMware Infrastructure, is in its third generation.
We work closely with over 500 technology partners, including leading server, microprocessor, storage, networking and software vendors.
We have shared the economic opportunities surrounding virtualization with our partners by facilitating solution development through open
Application Programming Interface (“APIs“), formats and protocols and providing access to our source code and technology. The endorsement
and support of our partners have further enhanced the awareness, reputation and adoption of our virtualization solutions.
We have developed a multi-channel distribution model to expand our presence and reach various segments of the market. We derive a
significant majority of our revenues from our large indirect sales channel of nearly 10,000 channel partners that include distributors, resellers,
x86 system vendors and systems integrators. We believe that our partners benefit greatly from the sale of our solutions through additional
services, software and hardware sales opportunities. We have trained a large number of partners and end users to deploy and leverage our
solutions.
We were incorporated as a Delaware corporation in 1998 and continued to operate in large measure as a stand-alone company following
our acquisition by EMC in 2004 and following our initial public offering (“IPO”) of our Class A common stock in August 2007. During 2007,
we generated $1.326 billion in revenues, an 88% increase over our 2006 results. For financial information about our business by product and
geographic area, see Note L to the consolidated financial statements included elsewhere in this filing. Our corporate headquarters are located at
3401 Hillview Avenue, Palo Alto, California and we have 54 offices worldwide.
Overview of Virtualization
Virtualization was first introduced in the 1970s to enable multiple business applications to share and fully harness the centralized
computing capacity of mainframe systems. Virtualization was effectively abandoned during the 1980s and 1990s when client-
server applications
and inexpensive x86 servers and personal computers established the model of distributed computing. Rather than sharing resources centrally in
the mainframe model,
1
ITEM 1.
BUSINESS