VMware 2011 Annual Report Download - page 22

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Table of Contents
Additionally, as we continue to expand our business globally, we will need to maintain compliance with legal and regulatory requirements
covering the foreign activities of U.S. corporations, such as export control requirements and the Foreign Corrupt Practices Act, as well as with
local regulatory requirements in non-
U.S. jurisdictions. Our success will depend, in large part, on our ability to anticipate and effectively manage
these and other risks associated with our international operations. We expect a significant portion of our growth to occur in foreign countries,
which can add to the difficulties in maintaining adequate management and compliance systems and internal controls over financial reporting and
increase challenges in managing an organization operating in various countries.
Our failure to manage any of these risks successfully could negatively affect our reputation, harm our operations and reduce our
international sales.
certain information about their new products to ensure that our solutions interoperate with those products, our product development efforts
may be delayed or foreclosed.
Our products interoperate with Windows, Linux and other operating systems and the hardware devices of numerous manufacturers.
Developing products that interoperate properly requires substantial partnering, capital investment and employee resources, as well as the
cooperation of the vendors or developers of the operating systems and hardware. Operating system and hardware vendors may not provide us
with early access to their technology and products, assist us in these development efforts or share with or sell to us any application programming
interfaces, or APIs, formats, or protocols we may need. If they do not provide us with the necessary early access, assistance or proprietary
that software or hardware vendors develop products that compete with ours or those of our controlling stockholder, EMC, they may have an
incentive to withhold their cooperation, decline to share access or sell to us their proprietary APIs, protocols or formats or engage in practices to
actively limit the functionality, or compatibility, and certification of our products. To the extent that we enter into collaborations or joint
development and marketing arrangements with certain hardware and software vendors, vendors who compete with our collaborative partners
may similarly choose to limit their cooperation with us. In addition, hardware or operating system vendors may fail to certify or support or
continue to certify or support our products for their systems. If any of the foregoing occurs, our product development efforts may be delayed or
foreclosed and our business and results of operations may be adversely affected.
We rely on distributors, resellers, system vendors and systems integrators to sell our products, and our failure to effectively develop, manage
or prevent disruptions to our distribution channels and the processes and procedures that support them could cause a reduction in the
number of end users of our products.
Our future success is highly dependent upon maintaining and increasing the number of our relationships with distributors, resellers, system
vendors and systems integrators. Because we rely on distributors, resellers, system vendors and systems integrators, we may have little or no
contact with the ultimate users of our products, thereby making it more difficult for us to establish brand awareness, ensure proper delivery and
installation of our products, service ongoing customer requirements, estimate end-user demand and respond to evolving customer needs.
Recruiting and retaining qualified channel partners and training them in the use of our technology and product offerings
17
•
increased exposure to foreign currency exchange rate risk;
•
difficulties in enforcing contracts and collecting accounts receivable, and longer payment cycles, especially in emerging markets;
•
difficulties in delivering support, training and documentation in certain foreign markets;
• tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign
markets;
•
economic or political instability and security concerns in countries that are important to our international sales and operations;
• macroeconomic disruptions, such as monetary and credit crises, that can threaten the stability of local and regional financial institutions
and decrease the value of our international investments;
•
the overlap of different tax structures or changes in international tax laws;
•
reduced protection for intellectual property rights, including reduced protection from software piracy in some countries;
•
difficulties in transferring funds from certain countries; and
•
difficulties in maintaining appropriate controls relating to revenue recognition practices.