VMware 2009 Annual Report Download - page 11

Table of Contents
with some professional services sold via our channel partners. End users can obtain licenses to our products through individual discrete
purchases to meet their immediate needs or through the adoption of enterprise license agreements (“ELAs”). ELAs are comprehensive volume
license offerings that provide for multi-year maintenance and support at discounted prices. ELAs enable us to build long-term relationships with
our customers as they commit to VMware’s virtual infrastructure solutions in their data centers. Our sales cycle with end user customers ranges
from less than 90 days to over a year depending on several factors, including the size and complexity of the customer’s infrastructure.
The competitive landscape in which we operate includes not only other software virtualization vendors, but also traditional hardware
solutions. In establishing prices for our products, we take into account, among other factors, the value our products and solutions deliver, and the
cost of both alternative virtualization and hardware solutions. We believe the significant number of customers who also purchase our software
services reflects a clear customer perception as to the value of our software services.
Our marketing efforts focus on communicating the benefits of our solutions and educating our customers, distributors, resellers, x86
system vendors, systems integrators, the media, and analysts about the advantages of our innovative virtualization technology.
We raise the awareness of our company, market our products, and generate sales leads through industry events, public relations efforts,
marketing materials, free downloads, and our website. On average, our website receives approximately 1.2 million cumulative, unique visits to
www.vmware.com each week, as measured by a third-party tracking system. We also have created an online community called VMware
Technology Network (“VMTN”) that enables customers and partners to share and discuss sales and development resources, implementation best
practices, and industry trends among other topics. Attendance at VMworld in the U.S. has grown from approximately 1,400 attendees in 2004 to
nearly 13,000 attendees in 2009. We also offer management presentations, seminars, and webinars on our products and topics of virtualization.
We believe a combination of these efforts strengthens our brand and enhances our leading market position in our industry.
Our business is subject to seasonality in the sale of our products and services. Additionally, our fourth quarter revenues are affected by a
number of seasonal factors, including fiscal year-end spending trends. Such factors historically have contributed to stronger fourth quarter
revenues in any given year. We believe that seasonal factors are common within our industry.
Customers
Our customers include 100% of the Fortune 100 and approximately 96% of the Fortune 1000. Our customer deployments range in size
from a single virtualized server for small businesses to up to thousands of virtual machines for our largest enterprise customers. In periodic third-
party surveys commissioned by us, our customers indicate very high satisfaction rates with our products and many have indicated a strong
preference for repeat purchases.
During 2009, two distributors, who purchase software licenses and software support from us for resale to end user customers directly or via
resellers, each accounted for over 10% each of our worldwide revenues. Arrow Electronics, Inc. and Ingram Micro, Inc. accounted for 16% and
15%, respectively, of our worldwide revenues in 2009. Our distribution agreements are typically terminable at will by either party upon 30 to 90
days’ prior written notice to the other party, and neither party has any obligation to purchase or sell any products under the agreement. No other
channel partner accounted for more than 10% of our revenues in 2009.
8