VMware 2011 Annual Report Download - page 10

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Table of Contents
Technology Alliances
Consistent with our partner-centric strategy, we have engaged a broad group of hardware, software and cloud computing service vendors to
cooperatively advance virtualization technology through joint marketing, product interoperability, collaboration and co-development. We create
solutions.
We have more than 2,100 technology partners with whom we bring joint offerings to the marketplace and more than 6,800 Service Provider
partners. We classify our partners as follows:
The VMware Technology Alliance Partner program facilitates joint solution creation and coordinated go-to-market activities with our
solutions for enterprise resource planning, human resource management, electronic medical records management, financial processing and
middleware such as application servers and databases. As an extension to this rapidly growing list, we have expanded our VMware Ready
program to allow application software and desktop solution providers to qualify for the VMware Ready logo. The VMware Ready Desktop
Solutions program validates the reference architecture and desktop specialization of solution providers that simplify VMware virtual desktop
environments.
Our ISVs and other alliance partners, developers and additional VMware community members have distributed more than 1,900 software
applications as virtual appliances. We invest significant capital in testing and certification of infrastructure to rigorously ensure our software
works well with major hardware and software products. We have more than 7,700 servers, storage, I/O and thin-client devices that are VMware
Ready. We have successfully tested approximately 570 operating system versions for use with our solutions. We believe that the scale and scope
of this effort is a significant competitive advantage.
Research and Development
We have made, and expect to continue to make, significant investments in research and development (“R&D”). We have assembled an
experienced group of developers with system level, systems management, desktop, mobile devices, security, application development,
collaborative applications and open source software expertise. We also have strong ties to leading academic institutions around the world, and
we invest in joint research with academia.
We prioritize our product development efforts through a combination of engineering-driven innovation and customer and market-driven
feedback. Our R&D culture places high value on innovation, quality and open collaboration with our partners. We currently participate in
("INCITS"), the Storage Networking Industry Association and the OSGi Alliance.
Our R&D expenditures, including amounts capitalized, totaled $861.5 million , $724.6 million and $580.1 million in 2011 , 2010 and 2009 ,
respectively.
Sales and Marketing
We sell and market our products largely through a network of channel partners, which includes distributors, resellers, system vendors and
systems integrators, with over 85% of our sales in 2011 derived from this network. The remainder is primarily derived from direct sales.
We have established ongoing business relationships with our distributors. Our distributors purchase software licenses and software support
from us for resale to end-user customers via resellers.
A substantial majority of our resellers obtain software licenses and software support from our distributors and market and
5
• Independent Hardware Vendors (“IHVs”).
We have established strong relationships with large system vendors, including Cisco, Dell,
Fujitsu, Fujitsu-Siemens, HP, IBM, Lenovo and NEC for joint certification and co-development. We also work closely with AMD, Intel
and other IHVs to provide input on product development to enable them to deliver hardware advancements that benefit virtualization
users. We coordinate with the leading storage and networking vendors to ensure joint interoperability and enable our software to access
their differentiated functionality.
• Independent Software Vendors (“ISVs”). We partner with leading systems management, infrastructure software and application
software vendors - including the top healthcare, telecom, finance and retail market leaders, to deliver value-added products that integrate
with our VMware products.
• VMware Service Providers. We have established partnerships with over 6,800 service providers including Bluelock, Colt, Sing Tel,
Terremark,Verizon and AT&T to enable them to host and deliver enterprise-class hybrid clouds as a way for enterprises to extend their
datacenters to external clouds, while preserving security, compliance and quality of service.