Incredimail 2011 Annual Report Download - page 45

Industry trends expected to affect our revenues, income from continuing operations, profitability and liquidity or capital resources :
1.
As a result of our in depth consumer research and the success of our email client, we have found that our products address an underserved market of later
technology adapters. We have found that these consumers are looking for simple, safe and useful products that assist in better utilizing their time. We intend to
address this unique market segment, which is the largest growing audience online today, by further adapting our products to better address their evolving
requirements as well as offering them other products and services that they use frequently and address similar needs. This market segment, of roughly 300
million people, is currently underserved as it is not targeted by the new technology companies that are targeting early hi-
tech adapters, or by the large
conglomerates that seek to service horizontally the general public, rather than a specific vertical demographic. We believe that we on the other hand with our
successful experience with our IncrediMail email client, are well equipped to address these needs. We have decided to focus on three basic needs for our
consumers: communications, photo sharing and safety and security. These are all areas that our research indicated are frequently used by our audience online
(e.g. more than once a month and often multiple times a week) and are related to each other beginning with communications which is staple for anyone online
today, using that communication means to share photos and other information and attachments and unfortunately given its very nature and ubiquity this same
communication platform is the biggest cause of viruses and malware for one’
s computer as hackers and criminals use the trust of a friend and the delivery
mechanism of photo sharing and email.
2. In recent years, we have witnessed an increase in the use of web-based e-mail solutions such as Microsoft Hotmail, Yahoo! Mail and Google’
s
Gmail. Facebook Mail is relatively new addition to this market, having a lot of potential based on its social network popularity. While our product is based on
the use of these email products, and there is still a vast market for PC based email clients, there is no doubt that the popularity of web-
based email is growing
at the expense of the PC based software. This has caused us to increase our efforts in adapting our product to the specific consumer needs not satisfied by the
web-
based solution. Further investment is also required in other forms of online communication as audiences (especially younger ones) are using email less.
The continual growth in social communication products and services as well as smartphones make it essential for our products to be compatible with
Facebook, Twitter, SMS and other forms of social communication. We will continue to make investments both organic and through acquisitions to further
solidify our position with new products and services focusing on social communication products and look to increase our investment on the usage of social
media to generate more users to our brands.
3.
The sharing and storing of digital photos on personal computers, and on photo hosting sites such as Flickr.com, Facebook or Shutterfly has increased
substantially in recent years. The convenience of such online storage of photos has created a growing commercial industry with products like personalized
photo books, cards, calendars, stationery, scrapbooks (printed and digital) as well as photo backup services and storage services. The printing of 5X7 photos
and sharing them via mail has significantly declined yet the number of photos taken with digital cameras has increased to 360 billion or 700,000 per minute
according to the PMA and Facebook users now upload and share 190,000 photos per minute. However, a problem often experienced by people that store their
photos on their hard disk or on a photo-
hosting site is that they simply do not enjoy their photos as they had previously. In the past, people spent time looking
through their photo albums, but today photos are saved in a computer folder and easily forgotten about or lost. Access to photos saved on personal computers
is not immediate and is somewhat tedious; hence, old favorite photos are neglected over time. Furthermore, so many photos can be overwhelming. Both
Smilebox and PhotoJoy
, are aimed at helping people easily find, create and share their pictures enabling users to enjoy all the photos that they have stored on
their computer or online using new capabilities, with no effort from the user. As camera phones continue to improve and more and more users use their camera
phones to capture their special momentsthere is significant growth opportunity for us to help users create special memories both “in the moment” and “
after
the moment.
”
4.
There has been a growing usage of portable platforms bridging between the mobile phone and the PC, enabling users to enjoy a more graphic and creative
experience, while not requiring a PC. This trend is most prominent with the advent of the iPhone
TM
and since then other similar "smart phone" products and
the more recent iPad
TM
and similar products. In addition, and partially as a result of these successes, the Apple-
Mac platform popularity has increased as well.
Although this trend is attracting an increasing portion of the market, we believe that particularly with regard to our demographic, the PC environment will
remain the predominant platform for managing emails in the near future. That being said, as the growth of these alternative platforms increases, we intend to
incorporate solutions in our products that will enable cross
-
platform access.
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