Rosetta Stone 2012 Annual Report Download - page 6

Table of Contents
in a selection of time-based offers (e.g. three, six and 12 months durations). , a solution designed specifically for English learners who want to
improve their listening and speaking skills, is sold as an online subscription in South Korea and Japan. The core Rosetta Stone language-learning
solution offered in  online and Version 4  is offered in over 30 languages under the  brand. Each language currently has
up to five levels and there are four different editions of our product: personal, enterprise, classroom and home school.
Our solutions are available both in a perpetual format (CD-ROM or download) and by subscription online through our language-learning portal.
For the year ended December 31, 2012, approximately 66% of our revenue was from CD-ROM or download sales while approximately 34% was from
online subscriptions to both consumers and institutions.
Our solutions include stand-alone sales and bundles of certain of the following components:
• is the self-study interactive language-learning curriculum that is the core component of the Rosetta Stone offering. The
course consists of sequences of listening, speaking, reading, and writing interactions designed to teach, reinforce and test learners
through our software program.
• is a series of coach-led practice sessions that align with the curriculum in  Studio sessions provide
learners with the opportunity to practice what they have learned in , by talking with a native-speaking coach and other
learners.
•is an interactive community of language learners.gives learners the opportunity to play games with other
learners in a structured manner that reinforces what they have learned inand
• is a series of digital audio files that contain lessons directly aligned to the Rosetta Stone curriculum, allowing users to
practice and carry on their immersive experience when they are away from a computer. The lessons on the  can be
transferred to various audio platforms.
• is a learning tool that provides access to  with the exception of the review and writing path
steps, for use on tablet devices.  includes our speech recognition technology.
• includes a series of practice lessons which use images, audio and our speech recognition technology to help users
refine their speaking skills while they are away from their computer.

Our product portfolio is a result of significant investment in product development over 20 years. Our product development focuses on both
software and content development. Our development efforts include both creating new solutions and adding new languages to existing solutions. Our
development team has specific expertise in speech recognition, interface design, immersion learning and instructional design.
Our research and development expenses were $23.5 million, $24.2 million, and $23.4 million for the years ended December 31, 2012, 2011 and
2010, respectively.
We are evaluating changes to our products to strengthen our brand and improve the relevance of our offerings. We are developing our first set of
products for children. In addition, we are enhancing our offering for educational organizations to expand our Institutional business. We intend to make
our products more modular, flexible and mobile.
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