VMware 2009 Annual Report Download - page 4

Table of Contents
PART I
VMware is the leading provider of virtualization solutions from the desktop to the data center and to the cloud. Our virtualization solutions
represent a pioneering approach to computing that separates 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 information technology (“IT”) problems that include cost and operational inefficiencies, business continuity, software lifecycle
management, and desktop management. The benefits to our customers include substantially lower IT costs, cost-
effective high availability across
a wide range of applications, 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 96% of the Fortune 1000. 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 eleven years since the introduction of our first virtualization platform, we have expanded our product
offerings to address distributed and heterogeneous infrastructure challenges such as planned and unplanned downtime management, system
recoverability and reliability, backup and recovery, resource provisioning and management, capacity and performance management, and
security.
We work closely with more than 1,300 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 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 Corporation (“EMC”) in 2004 and following our initial public offering of our Class A common stock in August 2007.
EMC holds 81% of our outstanding common stock, including 27 million shares of our Class A common stock and all of our Class B common
stock, and we are considered a “controlled company” under the rules of the New York Stock Exchange. Total revenues in 2009 increased 8% to
$2,023.9 million. This included license revenues of $1,029.4 million and services revenues of $994.5 million. In the years ended December 31,
2009, 2008 and 2007, nearly all of our license revenues were from our virtualization platforms (including data center and desktop solutions) with
the balance from our other solutions (which is composed of Applications Middleware and Management). Of our total services revenues in 2009,
83% were software maintenance revenues and 17% were professional services revenues. For additional financial information on our business by
product and geographic area, see Note M 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 approximately 78 offices worldwide.
We began shipping our first product in 1999, and today we offer multiple products from the desktop to the data center and to the cloud.
Our business is organized around providing solutions for three major IT predicaments: reducing costs and increasing operational efficiency in
data centers, providing easy access to “cloud computing” capacity and simplifying management and control of corporate client computing.
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ITEM 1.
BUSINESS