VMware 2009 Annual Report Download - page 25

Table of Contents
If sales expected from a specific customer for a particular quarter are not realized in that quarter or at all, our results could fall short of
public expectations and our business, financial condition and results of operations could be materially adversely affected.
Our current research and development efforts may not produce significant revenues for several years, if at all.
Developing our products is expensive. Our investment in research and development may not result in marketable products or may result in
products that take longer to generate revenues, or generate less revenues, than we anticipate. Our research and development expenses were over
20% of our total revenues, in both 2009 and 2008. Our future plans include significant investments in software research and development and
related product opportunities. We believe that we must continue to dedicate a significant amount of resources to our research and development
efforts to maintain our competitive position. However, we may not receive significant revenues from these investments for several years, if at all.
We may not be able to respond to rapid technological changes with new solutions and services offerings, which could have a material
adverse effect on our sales and profitability.
The markets for our software solutions are characterized by rapid technological changes, changing customer needs, frequent new software
product introductions and evolving industry standards. The introduction of third-
party solutions embodying new technologies and the emergence
of new industry standards could make our existing and future software solutions obsolete and unmarketable. We may not be able to develop
updated products that keep pace with technological developments and emerging industry standards and that address the increasingly
sophisticated needs of our customers or that interoperate with new or updated operating systems and hardware devices or certify our products to
work with these systems and devices. There is no assurance that any of our new offerings would be accepted in the marketplace. Significant
reductions in server-related costs or the rise of more efficient infrastructure management software could also affect demand for our software
solutions. As hardware and processors become more powerful, we will have to adapt our product and service offerings to take advantage of the
increased capabilities. For example, while the introduction of more powerful servers presents an opportunity for us to provide better products for
our customers, the migration of servers to quad-core and greater multi-core microprocessor technology will also allow an end user with a given
number of licensed copies of our software to more than double the number of virtualization machines run per server socket without having to
purchase additional licenses from us. As a result, we may not be able to accurately predict the lifecycle of our software solutions, and they may
become obsolete before we receive the amount of revenues that we anticipate from them. If any of the foregoing events were to occur, our ability
to retain or increase market share and revenues in the virtualization software market could be materially adversely affected.
Our success depends upon our ability to develop new products and services, integrate acquired products and services and enhance our
existing products and services.
If we are unable to develop new products and services, or to enhance and improve our products and support services in a timely manner or
to position and/or price our products and services to meet market demand, customers may not buy new software licenses from us or renew
software license updates and product support. In addition, information technology standards from both consortia and formal standards-setting
forums as well as de facto marketplace standards are rapidly evolving. We cannot provide any assurance that the standards on which we choose
to develop new products will allow us to compete effectively for business opportunities in emerging areas such as cloud computing.
New product development and introduction involves a significant commitment of time and resources and is subject to a number of risks
and challenges including:
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• managing the length of the development cycle for new products and product enhancements, which has frequently been longer than
we originally expected;
•
managing customers
’
transitions to new products, which can result in delays in their purchasing decisions;