Rosetta Stone 2011 Annual Report Download - page 9

Table of Contents
In addition, we plan on increasing the percent of business that is delivered online through a selection of time-based offers (e.g. 3, 6 and 12 month language
products). We also plan to augment select retail relationships while reducing our financial exposure to underperforming store-based retail partners. In
addition, we plan to realign our cost structure to help fund investment in areas of growth.
Reposition Global Kiosks. During 2012, based on our evaluation of historical and forecasted kiosk sales performance, we plan to significantly reduce
the size of our worldwide kiosk program, in addition to continually reviewing the performance of remaining kiosk locations.
Increase Our Focus on the Global Institutional Market. We plan to intensify our efforts to engage new large institutional customers for which language
learning is critical. We expect to expand our direct sales force along with our institutional marketing activities.
Increase Our Focus on Sizeable Non-U.S. Markets. We generated approximately 21% of our revenue in 2011 from sales outside the United States. We
believe that there is a significant opportunity for us to expand our business internationally utilizing many of the successful marketing and distribution
strategies we have used in the United States. We have established subsidiaries in the United Kingdom, Japan, Germany, South Korea and Brazil to develop
our international business. In addition, we are exploring opportunities to expand our presence further in Asia, Europe and Latin America. Because our
solutions do not rely upon translation from the target language into the learner's native language, they require only modest localization to be used by learners
from other native language backgrounds, and thus we believe that we can efficiently scale our business internationally. We launched Version 4 TOTALe in
Japan in February 2011, in the United Kingdom in May 2011, and in South Korea in July 2011. In addition, we launched ReFLEX in South Korea in July
2011.
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, Rosetta Stone Version 4 TOTALe, which was released in September 2010, combines packaged
software with opportunities to practice with dedicated conversational coaches and other language learners to increase language socialization as well as online
language-learning games. In July 2011, we launched our English remediation solution, ReFLEX, targeting intermediate learners in Asia. This solution targets
intermediate English learners in Asia who can read and write, but have low conversational fluency. It provides learners with foundational phonetic skills while
building confidence through spoken conversation and activating learners' strong English grammar and vocabulary knowledge in conversational practice
sessions designed to carefully advance learners to converse fluidly and confidently with native speakers. In addition, we will continue to support delivering
our language-learning content on existing platforms such as iPhones, iPads and similar devices. We intend to continue improving the efficacy of our solutions
by continuing to develop products with higher frequency of socialization and optimizing the content of our solutions.
Products and Services
Core Product Offering
The core Rosetta Stone language-learning solution is offered in two versions for over 30 languages under the Rosetta Stone brand. Each language
currently has up to five levels, with each consecutive level representing a higher level of proficiency. We sell each level as a standalone unit, although we
offer a price incentive to customers to purchase all available levels of a language as a bundle, where that option is available.
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