Rosetta Stone 2009 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2009 Rosetta Stone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 128

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128

Table of Contents
placement. In addition, approximately 64% of the students participating in the study increased their oral proficiency by at least one level on a seven-level
scale based on the American Council on the Teaching of Foreign Languages (ACTFL) OPIc test, which is used worldwide by academic institutions,
government agencies, and private corporations for evaluating oral language proficiency.
In May 2009, we commissioned Rockman et al, an independent evaluation research and consulting firm, to conduct a quantitative study to measure the
effectiveness of the Rosetta Stone solution including new Rosetta Stone TOTALe, and product features such as Rosetta Studio, our live online language
learning practice sessions with dedicated conversation coaches. According to the study, after 64 hours of study with Rosetta Stone Spanish (Latin American)
and six hours of Rosetta Studio sessions, 78% of the students participating in the study increased their oral proficiency by at least one level on the seven-level
scaled developed by ACTFL. Based on the overall results from the research study, the researchers from Rockman et al concluded that the Rosetta Stone
solution is both an effective and efficient means of learning foreign languages.
Our Strategy
Our goal is to strengthen our position as a leading provider of language learning solutions through the following strategies:
Extend Our Technological and Product Leadership. We intend to apply new technologies to maintain our product leadership. We currently are working
on a variety of product development initiatives. For example, in July 2009, we introduced Rosetta Stone TOTALe, a new web-based service that extends our
existing language courses by offering opportunities for practice with dedicated language conversation coaches and other language learners to increase
language socialization, offering online learning games and interaction with native speakers and offering live support from customer service agents. We
provide Rosetta Stone TOTALeprimarily as a bundle with our software and audio offerings. At the same time, we expect to provide augmented free peer-to-
peer language practice, building on our existing success with www.sharedtalk.com. In addition, we are evaluating opportunities to extend our learning
solutions to hand-held devices, and we intend to continue to advance our proprietary software platform and our speech recognition technology.
Expand Our Core Product Portfolio. We plan to expand our product portfolio by adding more advanced course levels for our existing languages. We
give learners the option to purchase our solutions at a single level of difficulty, or as a bundle of all available levels. Currently, six of our languages are
offered in all five levels of proficiency and another 19 of our languages are offered in the first three levels of proficiency. Our other six languages are
available in only one level of proficiency. We also plan to add new languages and new skill development and remediation courses for advanced language
learners. We believe that there is an opportunity to increase our revenue as we introduce additional levels of proficiency to our existing languages. In addition,
we believe that there may be opportunities for us to introduce additional language learning solutions containing industry-specific content.
Increase U.S. Market Share. To increase our penetration of the U.S. market and expand our brand awareness, we intend to increase our marketing
campaigns through the purchase of additional television, print, radio and online advertising, and to explore new media channels. We believe that our multi-
channel marketing model helps to build greater brand awareness, which over time will further increase our marketing efficiency. We also intend to continue to
add select retail relationships and kiosks. For example, a selection of our solutions has become available in Office Depot, Books-A-Million and London Drugs
retail outlets. For our institutional business, we expect to expand our direct sales force along with our institutional marketing activities. During the third
quarter of 2010 we plan to introduce a new version of our core offering called Rosetta Stone Version 4 TOTALe, which integrates our current Version 3
language learning software solution with our Rosetta Stone TOTALe
8