VMware 2012 Annual Report Download - page 13

Table of Contents
The information found on our website is not part of, and is not incorporated by reference into, this or any other report we file with, or
furnish to, the SEC.
Unless the context requires otherwise, we are referring to VMware, Inc. when we use the terms “VMware,” the “Company,” “we,” “our” or
“us.”
The risk factors that appear below could materially affect our business, financial condition and results of operations. The risks and
uncertainties described below are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that
affect many other companies.
Risks Related to Our Business
As the market for our computer virtualization products has matured, we have been increasingly developing and marketing products and
services targeted toward the delivery, management and automation of information technology (
“IT”) infrastructure, platforms and services
through cloud-based solutions. If businesses do not find our cloud computing solutions compelling, our revenue growth and operating
margins may decline.
Our products and services are based on computer virtualization and related technologies that have primarily been used for virtualizing on-
premises data centers. As the market for data center virtualization has matured, we have increasingly directed our product development and
marketing toward products and services that enable businesses to utilize virtualization as the foundation for cloud-
based computing, management
and automation of the delivery of IT resources and end-user computing. We are also investing in the development of products and services for
the emerging platform as a service, or “PaaS,” and software as a service, or “SaaS,” markets. Our success depends on organizations and
customers perceiving technological and operational benefits and cost savings associated with the increasing adoption of virtualization-based
infrastructure and management solutions for cloud computing, application development and end-user computing. As the market for our data
center virtualization products mature and the scale of our business increases, the rate of growth in our product sales will likely be lower than
those we have experienced in earlier periods and we expect our annual revenue growth rate in 2013 to decline from the growth rate of 22%
experienced in 2012. In addition, to the extent that our newer cloud computing infrastructure management and automation, or software-defined
data center (“SDDC”), solutions, end-user computing, PaaS and SaaS solutions are adopted more slowly or less comprehensively than we
expect, our revenue growth rates may slow materially or our revenue may decline substantially.
The large majority of our revenues have come from our data center virtualization products including our flagship VMware vSphere product
line. Decreases in demand for our data center virtualization products could adversely affect our results of operations and financial condition.
In fiscal year 2012, approximately 90% of our license revenues were from our cloud infrastructure and management solutions with the
balance from our other solutions. Although we continue to develop other applications for our virtualization technology such as our end-user
computing products, we expect that our data center virtualization products and related enhancements and upgrades will constitute a majority of
our revenue for the foreseeable future. Declines and variability in demand for our data center virtualization products could occur as a result of:
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• additional information on financial metrics, including reconciliations of non-
GAAP financial measures discussed in our presentations to
the nearest comparable GAAP measure;
•
press releases on quarterly earnings, product and service announcements, legal developments and international news;
• corporate governance information including our certificate of incorporation, bylaws, corporate governance guidelines, board committee
charters, business conduct guidelines (which constitutes our code of business conduct and ethics) and other governance-
related policies;
•
other news, blogs and announcements that we may post from time to time that investors might find useful or interesting; and
•
opportunities to sign up for email alerts and RSS feeds to have information pushed in real time.
ITEM 1A.
RISK FACTORS
•
improved products or product versions being offered by competitors in our markets;
•
competitive pricing pressures;
• failure to release new or
enhanced versions of our data center virtualization products on a timely basis, or at all;
• technological change that we are unable to address with our data center virtualization products or that changes the way enterprises
utilize our products; and