HP 2012 Annual Report Download - page 17

an opportunity to access new markets for maturing products. In addition, we believe that future growth
is dependent in part on our ability to develop products and sales models that target developing
countries. In this regard, we believe that our broad geographic presence gives us a solid base upon
which to build such future growth.
A summary of our domestic and international net revenue and net property, plant and equipment
is set forth in Note 19 to the Consolidated Financial Statements in Item 8, which is incorporated herein
by reference. Approximately 65% of our overall net revenue in fiscal 2012 came from outside the
United States. The substantial majority of our net revenue originating outside the United States was
from customers other than foreign governments.
For a discussion of risks attendant to HP’s foreign operations, see ‘‘Risk Factors—Due to the
international nature of our business, political or economic changes or other factors could harm our
future revenue, costs and expenses and financial condition,’’ in Item 1A, ‘‘Quantitative and Qualitative
Disclosure about Market Risk’’ in Item 7A and Note 10 to the Consolidated Financial Statements in
Item 8, which are incorporated herein by reference.
Research and Development
We are committed to innovation as a key element of HP’s culture. Our development efforts are
focused on designing and developing products, services and solutions that anticipate customers’
changing needs and desires and emerging technological trends. Our efforts also are focused on
identifying the areas where we believe we can make a unique contribution and the areas where
partnering with other leading technology companies will leverage our cost structure and maximize our
customers’ experiences.
HP Labs, together with the various research and development groups within the five principal
business segments, are responsible for our research and development efforts. HP Labs is part of our
Corporate Investments segment.
Expenditures for research and development were $3.4 billion in fiscal 2012, $3.3 billion in fiscal
2011 and $3.0 billion in fiscal 2010. We anticipate that we will continue to have significant research and
development expenditures in the future to provide a continuing flow of innovative, high-quality
products and services to maintain and enhance our competitive position.
For a discussion of risks attendant to our research and development activities, see ‘‘Risk Factors—
If we cannot successfully execute on our strategy and continue to develop, manufacture and market
products, services and solutions that meet customer requirements for innovation and quality, our
revenue and gross margin may suffer,’’ in Item 1A, which is incorporated herein by reference.
Patents
Our general policy has been to seek patent protection for those inventions and improvements
likely to be incorporated into our products and services or where proprietary rights will improve our
competitive position. At October 31, 2012 and 2011, our worldwide patent portfolio included over
36,000 patents, which represented a slight decrease over the number of patents in our patent portfolio
at the end of fiscal 2010.
Patents generally have a term of twenty years from the time they are filed. As our patent portfolio
has been built over time, the remaining terms on the individual patents vary. We believe that our
patents and applications are important for maintaining the competitive differentiation of our products
and services, enhancing our ability to access technology of third parties, and maximizing our return on
research and development investments. No single patent is in itself essential to HP as a whole or to any
of HP’s business segments.
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