What changed in this filing

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Item 1. Business

2020-09-23 compared with 2019-09-24 · 74 added, 97 removed, 144 unchanged (54% of the section changed)

Nutanix, Inc.

("we," "us," "our" or "Nutanix") provides a leading enterprise cloud platform that consists of software solutions that power many of the world’s business applications by digitizing the traditional silos of enterprise computing.

Founded in 2009, we pioneered hyperconverged infrastructure ("HCI"), initially combining the disparate IT silos of compute, storage and networking into a single on-premises product.

As the market realized the power, scalability and customer choice that HCI provides, we continued to innovate, and Acropolis Hypervisor ("AHV") - our hypervisor that provides free virtualization designed to run all virtualized applications - was born.

To give our customers even more choice, we engineered our software solutions to run on a variety of underlying hardware platforms, decoupling our software from our Nutanix-branded hardware appliances and creating a true enterprise cloud operating system that can power a variety of on-premises private cloud deployments;

("we," "us," "our" or "Nutanix") provides a leading enterprise cloud platform, which we call the Nutanix Cloud Platform, that consists of software solutions and cloud services that power our customers’ hybrid cloud and multicloud strategies.

Our solutions run across private-, hybrid- and multicloud environments, and allow organizations to seamlessly "lift and shift" their workloads, including enterprise applications, high-performance databases, end-user computing and virtual desktop infrastructure ("VDI") services, cloud native workloads, and analytics applications, between different cloud environments.

Founded in 2009, we pioneered the hyperconverged infrastructure ("HCI") category, initially combining the disparate IT silos of compute, storage and networking into a single on-premises product.

As the market realized the power, scalability and customer choice that HCI provides, we continued to innovate, and Acropolis Hypervisor ("AHV") - our native, no-cost hypervisor designed to run all virtualized applications - was born.

To give our customers even more choice, we engineered our software solutions to run on a variety of server platforms, decoupling our software from our Nutanix-branded hardware appliances and powering a variety of on-premises private cloud deployments;

a significant step in our transition from a hardware to a software company.

That transition has continued with the adoption of "cloud" as a mainstream IT paradigm, which has caused enterprises to move toward hybrid cloud architectures that allow businesses to simultaneously utilize a private cloud powered by Nutanix software, leverage third-party public cloud solutions where applicable, and distribute their IT architecture to the edge where their businesses increasingly engage with devices and users.

We continue to transform our software solutions into a comprehensive enterprise cloud platform, based on web-scale engineering and operational simplicity, which allows our customers to take advantage of the paradigm shift by providing simple-to-use and integrated solutions that can power nearly any scale IT deployment, while giving customers the freedom of choice to connect their Nutanix powered on-premises deployments with, and to run applications across, various cloud environments, utilizing various hardware platforms and taking advantage of various virtualization solutions.

Today, our enterprise cloud platform natively converges compute, virtualization, storage, networking, desktop and security services into one integrated, simple-to-consume solution.

Further, although our customers primarily use our enterprise cloud platform to power their on-premises private cloud deployments, our solutions also allow enterprises to simplify the complexities of a multi-cloud environment with automation, cost governance and compliance.

The end result will be an enterprise cloud platform that empowers our customers to unify various clouds - on-premises private, public and distributed - into one seamless cloud, allowing enterprises to choose the right cloud for each application.

In addition to our transition to a software-centric business model, and in order to further capitalize on the hybrid cloud paradigm shift and provide our customers with additional freedom to choose the best way to consume our enterprise cloud platform based on their specific business needs, we are also reshaping our licensing models in order to better meet changing customer demands by moving toward a subscription-based business model over the long term.

That transition has continued with the adoption of "cloud" as a mainstream IT paradigm, which has motivated IT professionals to move toward hybrid cloud architectures that allow businesses to simultaneously utilize a private cloud powered by Nutanix software, along with third-party public cloud infrastructures for maximum flexibility.

We continue to transform our software solutions into a comprehensive enterprise cloud platform, based on web-scale engineering principles and a focus on operational simplicity, which allows our customers to power nearly any scale IT deployment.

Although today our customers primarily use our enterprise cloud platform to power their on-premises private cloud deployments, our solutions also simplify the complexities of multicloud environments with a single management console for automation, cost governance and compliance.

In addition to our transition to a software-centric business model, and to provide our customers with the freedom to choose the best consumption model based on their specific business needs, we have also continued to reshape our licensing by moving toward a subscription-based business model.

A subscription-based business model means one in which our products, including associated support and entitlement arrangements, are sold with a defined term.

For more information, see the section titled "Components of Our Results of Operations" included in Part II, Item 7, as well as Note 3 of Notes to Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K.

That transition will result in our traditional life-of-device licensing models being increasingly replaced by term-based licenses, providing our customers with a subscription consumption option that matches the way they consume third-party public cloud services, and will provide true license portability across hybrid cloud deployments.

Furthermore, as part of our transition to a subscription-based business model, we have commenced our transition to a sales compensation structure that is based on Annual Contract Value ("ACV").

These transitions have caused, and will continue to cause, our traditional life-of-device licensing models to become increasingly replaced by term-based licenses, providing our customers with a subscription consumption option which are portable across hybrid- and multicloud deployments.

We believe that these transitions - from hardware to software solutions, and from life-of-device to subscription models - will contribute to our long-term growth, although they may have an adverse impact on our business and financial performance in the near term.

In fiscal 2019, our subscription billings increased to 60.5% of total billings, up 19 percentage points from fiscal 2018, and our subscription revenue reached $648.4 million , representing a year-over-year increase of 96.1% .

Our Enterprise Cloud Platform

Our enterprise cloud platform, which includes the software features, products and services described below, allows our customers to meld their on-premises private clouds with both third-party public clouds and distributed cloud operating infrastructures and uses powerful distributed systems architecture that natively converges compute, virtualization, storage, networking, desktop and security services into a single, integrated, simple-to-consume solution for our customers at each key stage of their enterprise cloud journey.

Our product portfolio is designed to track our customers’ journey to a full enterprise cloud, providing a turnkey solution at each key stage of the customer journey.

Nutanix Core, which includes our foundational HCI products, is

the first leg of the customer journey and seeks to bring simplicity and operational efficiency by facilitating the customer’s initial migration from the traditional siloed infrastructure to a simpler on-premises HCI platform.

We expect sales of Nutanix Core solutions to continue to make up a majority of our revenue for the foreseeable future.

Nutanix Essentials, which provides capabilities for our customers who want to build on our Core offerings and enhance security, automation, storage management and operational efficiencies, is the next step in the customer journey.

Finally, Nutanix Enterprise provides a suite of offerings to accompany our customers as they advance into the hybrid and multi-cloud deployment stage of their enterprise cloud transition journey.

Our customers begin their enterprise cloud journey-modernizing their IT infrastructures and migrating from traditional infrastructure to a simpler and integrated on-premises enterprise cloud platform-with Nutanix Core.

Nutanix Core is comprised of our HCI products, which form the foundation of our enterprise cloud platform:

Acropolis ("AOS"), our software-defined HCI product;

Prism, our HCI control plane and management console;

and AHV, our hypervisor that provides free virtualization.

In fiscal 2020, our subscription billings increased to 80.8% of total billings, up 20 percentage points from fiscal 2019, and our subscription revenue reached $1.0 billion, representing a year-over-year increase of 58.9%.

In fiscal 2020, our ACV billings was $505.2 million, representing a year-over-year increase of 17.9%.

The Nutanix Cloud Platform

Leveraging the foundation of our core HCI technology, the Nutanix Cloud Platform delivers a rich set of digital HCI services, datacenter services, DevOps services, and desktop services.

Digital HCI Services

Our HCI products – composed of Acropolis ("AOS"), a software-defined platform that converges compute, storage, and networking services, Prism, our consumer-grade control plane providing management and analytics for the entire enterprise cloud platform, and Acropolis Hypervisor ("AHV"), a native, enterprise-grade hypervisor designed to run all virtualized applications – form the foundation of the Nutanix Cloud Platform.

Acropolis (AOS) .

Acropolis is the foundation of our enterprise cloud platform, converging virtualization, enterprise storage services, virtual networking and platform services, including application mobility and security, into a single turnkey solution.

It is an open platform designed to address all needs for a wide range of workloads that can be run at nearly any scale and centrally managed.

Acropolis is comprised of four foundational components:

AOS converges virtualization, storage, and networking services into a turnkey solution.

AOS is comprised of three foundational components:

• Virtualization.

Acropolis supports all major hypervisors, including our native, free AHV.

Platform Services.

Acropolis delivers software-defined platform services that allow enterprises to consolidate and run all of their workloads on our enterprise cloud platform and manage them centrally.

Enterprise Storage Capabilities.

Building on a distributed data fabric, Acropolis enables robust enterprise storage services across multiple storage protocols.

Enterprise storage capabilities include performance acceleration capabilities, such as caching, data tiering and data locality and storage optimization, such as deduplication, compression and erasure coding, along with data protection and disaster recovery features.

AOS supports major hypervisors, including our native, no-cost AHV.

• Storage Capabilities.

Building on a distributed data fabric, AOS enables robust enterprise storage services across multiple storage protocols.

Storage capabilities include snapshots and cloning, performance acceleration capabilities, such as caching, data tiering and data locality and storage optimization, such as deduplication, compression and erasure coding, along with data protection and disaster recovery features.

• Networking Services.

Acropolis provides a comprehensive set of services to visualize the network, automate common network operations, secure the network through native services, such as micro-segmentation, and integrate with various third-party networking and security products.

Nutanix Prism is our consumer-grade control plane providing management and analytics across the entire enterprise cloud platform.

It delivers integrated virtualization and infrastructure management, robust operational analytics, self-service capabilities and one-click administration.

Prism allows routine IT operations that are typically manual and cumbersome to be fully automated or completed with just one click, including capacity planning, provisioning of new applications and resources, troubleshooting and software upgrades.

Prism enables efficient management of enterprise-wide deployments by serving as a central administration point to manage multiple clusters and hypervisors within a datacenter or across multiple sites.

Prism is also built using a distributed, scale-out architecture and software updates and patches can be executed non-disruptively without requiring the cluster to be brought offline.

Further, Prism offers a broad set of Application Programming Interfaces ("APIs") for integration with third-party products.

AOS provides services to visualize the network, automate common network operations, secure the network and integrate with various third-party networking and security products.

Nutanix Prism is our consumer-grade control plane providing management and analytics across the enterprise cloud platform.

It delivers integrated management, robust operational analytics, self-service capabilities and one-click administration.

Prism enables efficient centralized administration to manage multiple clusters within a single datacenter, or across multiple sites.

Prism also offers Application Programming Interfaces ("APIs") for integration with third-party products and advanced management and orchestration of Nutanix environments.

Acropolis Hypervisor .

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AHV also includes such features as flexible migrations, automated workload placement, security hardening, network virtualization, data protection and disaster recovery and rich analytics, while allowing for integrated management via Nutanix Prism to streamline the provisioning, placing and managing of VMs, thereby providing our customers with a high-performance virtualization solution while eliminating third-party virtualization costs.

Nutanix Essentials

Nutanix Essentials builds on our Core offerings and enhances security, automation, data management and operational efficiencies.

Composed of Calm , Files , Flow , Prism Pro and Mine , Nutanix Essentials is primarily focused on providing additional capabilities for our customers so that they can consume our Core solutions in a comprehensive and fully integrated private cloud environment.

Nutanix Calm adds native application orchestration, automation and lifecycle management to our enterprise cloud platform.

Calm automates the provisioning, scaling and updating of applications using easy-to-use blueprints that can be published for internal consumption across enterprises.

Nutanix Files is a software-defined file storage consolidation solution for unstructured file data that is easily scalable for a wide range of deployments and applications.

Files is natively integrated into our enterprise cloud platform and eliminates the need for a separate network-attached storage appliance by providing unified management for VM and enterprise file services.

Nutanix Flow, an application-centric network and policy management solution supported by AHV, allows users to deploy microsegmentation to secure individual applications or groups of applications with minimal changes to the existing network, enabling applications and environments to be governed independent of the physical infrastructure.

Flow also delivers advanced networking and security services that allow customers to gain greater visibility and granular control over applications.

Prism Pro is a set of features providing customers with advanced analytics and intelligent insights into their Nutanix environments.

These features include performance anomaly detection, capacity planning, custom dashboards, reporting and advanced search capabilities.

Powered by X-Fit, a purpose-built machine learning technology, and X-Play, a codeless task-automation engine, Prism Pro analyzes large volumes of system data to generate actionable insights and automate remediation and everyday tasks.

Nutanix Enterprise

Nutanix Enterprise provides a suite of products and services that give our customers additional choice, enabling new capabilities as customers advance from on-premises deployments into the hybrid and multi-cloud deployment stage of their enterprise cloud journey.

Nutanix Enterprise is composed of Objects , Karbon , Move , Era, Volumes and Xi Cloud Services .

Nutanix Objects is a scalable, software-defined object storage solution designed to support data archival and cloud native services that is managed as part of our enterprise cloud platform and is accessible via S3-compatible applications.

Nutanix Karbon is a turnkey, enterprise-grade Kubernetes service offering that simplifies the provisioning, operations and lifecycle management of Kubernetes.

Nutanix Move simplifies and streamlines the enterprise cloud transition by enabling the mobility of applications across both public and private cloud environments.

Nutanix Era is a database services software suite that automates and simplifies database provisioning and lifecycle management.

Era supports complex database environments, automatically maximizing infrastructure efficiency, and enables our customers to provision, clone, refresh and restore their databases to any point in time.

Nutanix Volumes provides a scale-out storage solution for non-virtualized workloads, allowing virtualized guest operating systems and physical hosts to directly access Distributed Storage Fabric storage resources.

Xi Cloud Services.

Nutanix Xi Cloud Services is our new suite of cloud-based services designed for multi-cloud management, and includes the following offerings:

Xi IoT is a cloud-agnostic edge computing platform that delivers local compute and artificial intelligence for the Internet of things ("IoT") edge devices, converging the edge platform and the customer’s choice of cloud infrastructure into a single data processing platform.

Xi Leap is a hybrid cloud disaster recovery service that enables enterprises to protect on-premises workloads and data without the need to set up a secondary datacenter by seamlessly extending their on-premises environment to the Xi Cloud.

Xi Leap is natively integrated into our enterprise cloud platform and can be deployed directly from Prism.

Xi Frame is a cloud-native and infrastructure-independent, desktop-as-a-service platform that combines the consumer-grade simplicity and web-scale design of cloud applications with the functionality of traditional virtual desktop applications.

It enables the delivery of applications and desktops from public clouds, as well as from private cloud deployments with AOS and AHV.

Xi Beam is a multi-cloud cost and security compliance optimization service that provides organizations with deep visibility into, and analytics on, their cloud consumption patterns, as well as cost optimization recommendations that can reduce a customer’s cost of ownership.

Xi Beam can also automate compliance with over 250 health checks and security best practices.

Xi Clusters , which is in development as of the date of this Annual Report, will allow deployment of AOS on Amazon Web Services ("AWS") infrastructure, giving customers the option of consuming Nutanix software via AWS.

Datacenter Services Solutions

The Nutanix Cloud Platform also provides the IT resources that data center professionals need to design, build and operate a cloud datacenter.

This includes scale-out storage services that consolidate management of structured and unstructured data.

Nutanix customers can simplify storage operations, while delivering enterprise-grade NFS and SMB files services (Nutanix Files), as well as S3-compatible object services (Nutanix Objects), at nearly any scale.

Security is designed into the Nutanix Cloud Platform, including application-centric firewall services based on advanced microsegmentation technology (Nutanix Flow) that protects applications against internal and external threats, as well as data encryption.

Nutanix solutions also provide strong user authentication, authorization and access services, activity monitoring and comprehensive logging.

With multiple industry security certifications, Nutanix solutions help customers across industries meet stringent security and compliance mandates.

Beyond protecting applications and data against security threats, the Nutanix Cloud Platform provides essential capabilities to maintain business continuity in the event of an IT failure, and to quickly recover from unplanned downtime.

Capabilities include built-in multi-site data replication and synchronization services, orchestration runbooks, and validated integration with popular data back-up solutions.

We also provide a managed, cloud-based disaster recovery service (Nutanix Xi Leap) to maintain IT operations in the event of a datacenter outage.

DevOps Services Solutions

As part of our integrated offering, we deliver services for application developers and DevOps teams to accelerate the development, testing, provisioning and scaling of applications across different cloud environments.

These services include automated database management to simplify database administration and to efficiently manage database copies that proliferate in most IT environments (Nutanix Era).

Also included are automation services that streamline application lifecycle management, provide self-service provisioning via an application marketplace, and deliver powerful hybrid cloud orchestration (Nutanix Calm).

Our DevOps Services solutions also allow for automated deployment and management of Kubernetes clusters to simplify the provisioning, operations and lifecycle management of cloud-native environments, containerized applications and microservices (Nutanix Karbon).

Desktop Services Solutions

The Nutanix Cloud Platform provides a rich set of end-user computing ("EUC") services that can reduce the cost of delivering virtualized desktops and applications, while improving performance and scalability.

Services include virtualization, file storage, security and networking for traditional VDI environments.

We also provide desktop-as-a-service (Nutanix Xi Frame) to deliver virtual apps or desktops to users from multiple public cloud environments and/or an enterprises private cloud datacenter, which can be easily accessed from any browser.

Delivery of Our Solutions

Our enterprise cloud platform can be deployed on-premises running on a variety of qualified hardware platforms or, in the case of our cloud-based software and software-as-a-service ("SaaS") offerings, via hosted service.

The Nutanix Cloud Platform can be deployed on-premises running on a variety of qualified hardware platforms, in popular public cloud environments such as Amazon Web Services through Nutanix Clusters, or, in the case of our cloud-based software and software-as-a-service ("SaaS") offerings, via hosted service.

Non-portable software licenses for our platform are delivered or sold alongside configured-to-order appliances, with a license term equal to the life of the associated appliance.

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Our enterprise cloud platform is typically purchased with one or more years of support and entitlements, which includes the right to software upgrades and enhancements as well as technical support.

Purchases of non-portable software typically come with an accompanying support and entitlement agreement with a term that matches the software license term.

Purchases of non-portable software are typically accompanied by the purchase of a separate support and entitlement agreement.

Purchases of term-based licenses and SaaS subscriptions have support and entitlements built into the license.

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Our End Customers

Our solutions serve a broad range of workloads, including enterprise applications, databases, virtual desktop infrastructure, unified communications and big data analytics, and we support both virtualized and container-based applications.

Our solutions serve a broad range of workloads, including enterprise applications, databases, virtual desktop infrastructure, and big data analytics, and we support both virtualized and container-based applications.

We have end customers across a broad range of industries, such as automotive, consumer goods, education, energy, financial services, healthcare, manufacturing, media, public sector, retail, technology and telecommunications.

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Our enterprise cloud platform is primarily sold through channel partners, including distributors, resellers and OEMs, and delivered directly to our end customers.

Arrow Electronics, Inc., a distributor to our end customers, represented

16% , 18% and 24% of our total revenue for fiscal 2017 , 2018 and 2019 , respectively.

Arrow Electronics, Inc., a distributor to our end customers, represented 18%, 24% and 29% of our total revenue for fiscal 2018, 2019 and 2020, respectively.

Tech Data Corporation, another distributor to our end customers, represented 13%, 13% and 14% of our total revenue for fiscal 2018, 2019 and 2020, respectively.

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• Continually innovate and maintain technology leadership.

Since inception, we have rapidly innovated from supporting limited applications and a single hypervisor to a full enterprise cloud platform that is designed to support a wide variety of workloads across private, public and multi-cloud deployments.

We intend to continue to invest heavily in developing our enterprise cloud platform with new features, services and products to expand our market opportunity.

• Invest to acquire new end customers.

We completed our first end customer sale in October 2011 and have since grown to approximately 14,180 end customers.

Since the completion of our first end customer sale in October 2011, we have grown to approximately 17,360 end customers.

We intend to grow our base of end customers by continuing to invest in sales and marketing, leveraging our network of channel partners and OEMs, furthering our international expansion and extending our enterprise cloud platform to address new customer segments.

One area of continued focus increasing our sales to new, and expanding our sales to existing, large enterprise customers.

One area of continued focus is increasing our sales to new, and expanding our sales to existing, large enterprise customers.

• Continue to drive follow-on sales to existing end customers.

Our end customers typically deploy our technology initially for a specific workload.

Our end customers typically deploy our technology initially for a specific project or application deployment.

Our sales teams and channel partners then seek to systematically target follow-on sales opportunities to drive additional purchases throughout our broader product portfolio.

This land and expand strategy enables us to quickly expand our footprint within our existing end customer base from follow-on orders that in the aggregate are often multiples of the initial order.

• Enhanced focus on renewals .

In addition to our land and expand strategy described above, as part of our transition to a subscription-based model, we have enhanced our focus on renewals, which are typically associated with lower sales costs.

We have also commenced our transition to an ACV-based sales compensation structure starting in August 2020, which we expect will shorten the lengths of our contract terms, allowing us in turn to benefit from such efficiency gains associated with renewals.

• Deepen engagement with current channel and OEM partners and establish additional routes to market to enhance sales leverage.

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We have developed relationships with a number of leading technology companies that help us deliver world-class solutions to our customers.

Through our Elevate Technology Alliance Partner Program, our developer, application, hardware and infrastructure partners get access to resources that allow them to validate and integrate their products with Nutanix solutions and engage in joint sales training and enablement.

Through our Technology Alliance Partner Program, our developer, application, hardware and infrastructure partners get access to resources that allow them to validate and integrate their products with Nutanix solutions and engage in joint sales training and enablement.

In addition, we work closely with our technology partners through co-marketing and lead-generation activities in an effort to broaden our marketing reach and help us win new customers and retain existing ones.

Our channel partners have joined our integrated partner program, the Nutanix Partner Network, which provides market development funds, preferred pricing through deal registration, sales enablement and product training, innovative marketing campaigns and dedicated account support.

We also coordinate with our OEM partners on joint marketing activities.

We supplement our sales efforts with our marketing programs that include print and

online advertising, corporate and third-party events, demand generation activities, social media promotions, media and analyst relations and community programs.

For example, in May 2019 we hosted our fifth annual .NEXT Conference, where nearly 6,000 attendees came to learn about our current and future products and solutions.

We supplement our sales efforts with marketing programs that include online advertising, corporate and third-party events, demand generation activities, social media promotions, media and analyst relations and community programs.

More recently, in response to the global COVID-19 pandemic, we have transformed nearly all of our in-person marketing programs into digital experiences.

For example, in September 2020 we hosted our sixth annual .NEXT Conference in a completely digital format, where approximately 41,000 digital attendees registered to learn about our current and future products and solutions.

We also establish deep integration with our ecosystem of third-party technology partners and engage in joint marketing activities with them.

Our channel partners have joined our integrated partner program, the Nutanix Elevate Partner Program, which provides market development funds, preferred pricing through deal registration, sales enablement and product training, innovative marketing campaigns and dedicated account support.

We also coordinate with our OEM partners on joint marketing activities.

Research and Development

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Super Micro and Flextronics assemble and test the Nutanix-branded NX series appliances and they generally procure the components used in the NX series appliances directly from third-party suppliers.

Our agreement with Super Micro automatically renews in May 2020 for successive one-year periods thereafter, with the option to terminate upon each annual renewal.

Our agreement with Super Micro was renewed in May 2020 for one year and will automatically renew for successive one-year periods thereafter, with the option to terminate upon each annual renewal.

Our agreement with Flextronics expires in November 2020 and automatically renews for successive one-year periods thereafter, with the option to terminate upon each annual renewal.

Distributors handle fulfillment and shipment for certain end customers, but do not hold inventory.

We typically accept and ship orders within a short time frame.

We typically accept and deliver orders within a short time frame.

In general, customers may cancel or reschedule orders without penalty prior to delivery, and delivery schedules requested by customers in their purchase orders vary based upon each customer’s particular needs.

As a result, we do not believe that our backlog at any particular time is a reliable indicator of future revenue.

We operate in the intensely competitive enterprise infrastructure market and compete primarily with companies that sell software to build and operate enterprise clouds, integrated systems and standalone storage and servers, as well as providers of public cloud infrastructure solutions.

We operate in the intensely competitive IT infrastructure market and compete primarily with companies that sell software to build and operate private clouds, integrated systems and standalone storage and servers, as well as providers of public cloud infrastructure solutions.

These markets are characterized by constant change and rapid innovation.

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and Microsoft Corporation.

In addition, we compete against vendors of hyperconverged infrastructure and software-defined storage products, such as Cisco, HPE, Dell, VMware and many smaller emerging companies.

As our market grows, we

expect it will continue to attract new companies as well as existing larger vendors.

In addition, we compete against vendors of hyperconverged infrastructure products, such as Cisco, HPE, Dell, VMware and many smaller emerging companies.

As our market grows, we expect it will continue to attract new companies as well as existing larger vendors.

Some of our competitors may also expand their product offerings, acquire competing businesses, sell at lower prices, bundle with other products, provide closed technology platforms, partner with other companies to develop joint solutions, or otherwise attempt to gain a competitive advantage.

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In addition, Dell owns a majority of the outstanding voting power of VMware, and a joint Dell and VMware offering would also compete directly with our core solutions.

Dell may also be incentivized to sell its own solutions over our products.

We believe the principal competitive factors in our market include:

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• system scalability, performance and resiliency;

management and operations, including provisioning, analytics, automation and upgrades;

• management and operations, including provisioning, troubleshooting, analytics, automation and upgrades;

• total cost of ownership over the lifetime of the technology;

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We believe we are positioned favorably against our competitors based on these factors.

However, many of our competitors have substantially greater financial, technical and other resources, greater brand recognition, larger sales forces and marketing budgets, broader distribution and larger and more mature intellectual property portfolios.

However, many of our competitors have substantially greater financial, technical and other resources, greater brand recognition, larger sales forces and marketing budgets, a larger existing customer base, broader distribution and larger and more mature intellectual property portfolios.

Intellectual Property

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patents expire between 2031 and 2039.

We also leverage open source software in some of our products.

We also leverage open source software in most of our products.

See Item 1A, "Risk Factors," for further discussion of risks related to protecting our intellectual property.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business