Rosetta Stone 2009 Annual Report Download - page 7

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Table of Contents
International, Inc., a market research firm, there will be more than one billion personal computers in use, and 1.7 billion internet users, by 2009. Given busy
lifestyles, adult language learners seek solutions that work flexibly and do not require physical classroom attendance. Educators are interested in deploying
learning tools that are relevant to their students, who have had extensive exposure to computer software and interactive games. Corporations are recognizing
the value and effectiveness of using their technology investment to help increase the skills of their workforce. According to a July 2007 report by Global
Industry Analysts, Inc., a market research firm, the global demand for the delivery of instructional content through the use of electronic technology, or
eLearning, will grow an average of 21% annually between 2007 and 2010, reaching a total estimated value of $53 billion by 2010.
The Need for a High-Quality, Trusted Solution. Consumers and institutions face a confusing array of alternatives when choosing a language course due
to the fragmented nature of the language learning market. Most providers of language learning offer little information to potential customers about their
teaching methods and do not have well known brands. The few major internationally known language learning providers generally offer only classroom
instruction, which is not convenient for all prospective language learners. In addition, there are numerous self-study courses in the market available at a
variety of price points, most of which are offered as audio and books and do not provide an interactive, immersion learning experience. There are also many
community websites that provide free opportunities to practice.
We believe that language learners seek a trusted name-brand solution that is more convenient and affordable than classroom alternatives, and more
effective, interactive and engaging than other self-study options. We believe the combination of these elements is not offered by traditional providers of
language instruction.
The Rosetta Stone Solution
Our mission is to change the way people learn languages. We believe our solutions provide an effective way to learn languages in a convenient and
engaging manner. Our approach, called Dynamic Immersion, eliminates translation and grammar explanation and is designed to leverage the innate, natural
language learning ability that children use to learn their native language. We consider traditional translation and grammar methods as obstacles that delay and
impede the successful acquisition of language proficiency, and our solutions avoid those elements. Our computer-based self-study courses allow our
customers to learn using the immersion method on their own schedule and for a price that is significantly lower than most classroom-based or one-on-one
alternatives. Although other audio and software publishers claim to teach with immersion methods, we believe that we are the only self-study solution that
teaches strictly without any translation or explicit grammar explanations. Our proprietary solutions have been developed over the past 16 years by
professionals with extensive linguistic, educational and instructional technology expertise. We estimate that our content library consists of more than 25,000
individual photographic images and more than 400,000 professionally recorded sound files. We design the sequencing of our content to optimize learning.
The result is a rigorous and complete language learning curriculum that is also designed to be flexible, fun and convenient.
Our language learning solutions are built upon a flexible software platform that supports multiple languages and is deployable on personal computers, on
local networks and online. The platform incorporates a number of proprietary technologies that are key to enabling language learning, including:
speech recognition that is focused on the unique challenges of language learners;
Adaptive Recall algorithms that repeat content at scheduled intervals to promote long-term retention;
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