Expedia 2005 Annual Report Download - page 16

We plan to significantly invest in our technology platform over the next two years. We are investing in
and building a scaleable, extensible, service-oriented technology platform which will extend across our
portfolio of brands. This will result in long-term cost savings, improved flexibility and faster go-forward
innovation. This transition will allow us to improve our site merchandising, browse and search
functionality, add significant personalization features, and ultimately improve our ability to drive higher
return-on-investment in our online and offline advertising. We expect this transition to occur in a phased
approach, with worldwide points of sale migrating to the new platform over the next two years.
We are also adding a significant upgrade to our data aggregation and mining capabilities across
Expedia with the installation of an enterprise data warehouse over the next two years.
Competition
Our brands compete in rapidly evolving and intensely competitive markets. We believe the relatively
low percentage of total travel sales transacted online in the global travel industry indicates that these
markets represent especially large opportunities for Expedia and those of its competitors that wish to
expand their brands and businesses abroad.
Our competition, which is strong and increasing, includes online and offline travel companies that
target leisure and corporate travelers including travel agencies, tour operators, travel supplier direct
websites and their call centers, consolidators and wholesalers of travel products and services and other
companies offering travel search engines including meta-search engines in each case, on a local, regional,
national and/or international basis.
We believe that maintaining and enhancing our brands is a critical component of our effort to
compete. We differentiate our brands from our competitors primarily based on quality and breadth of
travel products, channel features and usability, price, traveler service and quality of travel planning content
and advice. The emphasis on one or more of these factors varies, depending on the brand or business and
the related target demographic.
Our brands face increasing competition from travel supplier direct websites. In some cases, supplier
direct channels offer advantages to travelers, such as loyalty programs or lower transaction fees. Our
websites feature travel products and services from numerous travel suppliers (as opposed to a single
supplier). We face competition from airlines, hotels, rental car companies, cruise operators and other travel
service providers, whether working individually or collectively, some of which are suppliers to our websites.
Our business is generally sensitive to changes in the competitive landscape, including the emergence of
new competitors.
Intellectual Property Rights
We regard our intellectual property rights, including our patents, service marks, trademarks, domain
names, copyrights, trade secrets and other intellectual property, as critical to our success. For example, we
rely heavily upon the software code, informational databases and other components that make up our
travel planning service.
We rely on a combination of laws and contractual obligations with employees, travelers, suppliers,
affiliates and others to establish and protect our trade secrets. Despite these precautions, it may be possible
for a third party to copy or otherwise obtain and use our trade secrets or our intellectual property without
authorization which, if discovered, might require the uncertainty of legal action to correct. In addition,
there can be no assurance that others will not independently and lawfully develop substantially similar
properties.
We have registered and continue to apply to register, or secure by contract when appropriate, our
trademarks as they are developed and used. We also register domain names as we deem appropriate.
While we seek to protect our trademarks and domain names, effective trademark protection may not be
available or may not be sought by us for every trademark used in every country, and contractual disputes
may affect the use of trademarks governed by private contract. Similarly, not every variation of a domain
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