Pitney Bowes 2014 Annual Report Download - page 16

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supplies and services. The Bank also provides a deposit solution to those clients who prefer to prepay postage and earn interest on their
deposits. Not all our competitors are able to offer these financing and payment solutions to their customers and we believe these solutions
differentiate us from our competitors and are a source of competitive advantage. The Bank is chartered as an Industrial Bank under the
laws of the State of Utah, and regulated by the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial
Institutions.
Production Mail
We face competition from a small number of companies that offer large production printers, inserters or sorters, but only a few companies
are able to offer all of these products and integrate them into an end-to-end solution. The principal competitive factors include functionality,
reliability, productivity, price and support. We believe we have a competitive advantage as our equipment provides a wider range of
features and functionality and greater productivity than our competitors, which drives a higher investment return for our clients.
Presort Services
We are a significant third-party presort service provider in the United States and the only provider with a national network. We face
competition from regional and local presort providers, service bureaus that offer presort solutions as part of a larger bundle of outsourcing
services and large entities that have the capability to presort their own mailings in-house. The principal competitive factors include
innovative service, delivery speed, industry experience and expertise and economies of scale. Our competitive advantage includes our
extensive network, size of our presort facilities and our innovative and proprietary technology that enables us to provide our clients with
reliable and accurate services at maximum discounts.
Digital Commerce Solutions
The DCS segment operates in several highly competitive and rapidly evolving markets. We face competition from large global companies
that offer a broad range of solutions to smaller, more narrowly-focused companies that can design very targeted solutions. In addition,
major global delivery services companies are acquiring the technology to improve their global ecommerce shipping capabilities. The
principal competitive factors include reliability, functionality and ease of integration and use, scalability, innovation, support services
and price. We compete in this segment based on the accuracy and processing speed of our solutions, particularly those used in our location
intelligence and global ecommerce solutions, the breadth and scalability of our products and solutions, our single-sourced geocoding and
reverse geocoding capabilities, and our ability to identify rapidly changing customer needs and develop technologies and solutions to
meet these changing needs.
Our direct marketing services products compete with multiple alternative marketing offerings for a portion of our clients' overall marketing
budget by demonstrating the value of our products and services relative to these other marketing programs available to our advertising
clients.
Financing Solutions
We offer a variety of finance and payment solutions to clients to finance their equipment and product purchases, rental and lease payments,
postage replenishment and supplies purchases. We establish credit approval limits and procedures based on the credit quality of the client
and the type of product or service provided to control risk in extending credit to clients. In addition, we utilize an automatic approval
program for certain leases. This program is designed to facilitate low dollar transactions by utilizing historical payment patterns and
losses realized for clients with common credit characteristics. The program defines the criteria under which we will accept a client without
performing a more detailed credit investigation, such as maximum equipment cost, a client's time in business and payment experience.
We closely monitor the portfolio by analyzing industry sectors and delinquency trends by product line, industry and client to ensure
reserve levels and credit policies reflect current trends. Management continues to closely monitor credit lines and collection resources
and revise credit policies as necessary to be more selective in managing the portfolio.
Our financing operations face competition, in varying degrees, from large, diversified financial institutions, including leasing companies,
commercial finance companies and commercial banks, as well as small, specialized firms.
Research, Development and Intellectual Property
We invest in research and development programs to develop new products and solutions, enhance the effectiveness and functionality of
existing products and solutions and deliver high value technology, innovative software and differentiated services in high value segments
of the market. As a result of our research and development efforts, we have been awarded a number of patents with respect to several of
our existing and planned products. However, our businesses are not materially dependent on any one patent or license or group of related
patents or licenses.