Rosetta Stone 2013 Annual Report Download - page 7
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Table of Contents
creation of language learning content. Our development team builds new solutions and enhances or maintains existing solutions. We have specific expertise in
speech recognition technology, iterative and customer-focused product development, instructional design and language acquisition.
Our research and development expenses were $34.0 million, $23.5 million, and $24.2 million for the years ended December 31, 2013, 2012 and 2011,
respectively.
We continue to evaluate 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, including several mobile applications that were released in 2013. In addition, we are enhancing our offering for educational organizations
to expand our Global Enterprise & Education business. We intend to make our products more modular, flexible and mobile.
Our global consumer distribution channel comprises a mix of our websites, call centers, third party e-commerce websites such as Digital River and
Apple iTunes, select retail resellers, such as Amazon.com, Barnes & Noble, Target, Best Buy, Books-a-Million, Staples, Costco, daily deal partners such as
Groupon, home shopping networks such as GS Home Shopping in Korea and consignment distributors such as Speed Commerce and third-party resellers of
Lexia Core5. We believe these channels complement each other, as consumers who have seen our direct-to-consumer advertising may purchase at our retailers,
and vice versa.
Sales generated through either our websites or call centers.
Sales generated through arrangements with third-party e-commerce websites.
Our retailers enable us to provide additional points of contact to educate consumers about our solutions, expand our presence beyond our
own websites, and further strengthen and enhance our brand image. Our retail relationships include Amazon.com, Barnes & Noble, Best Buy, Books-a-
Million, Costco, Groupon, Staples, and others in and outside of the U.S.
We promote interest in this market through advertising in publications focused on home schooling, attending local trade shows,
seminars and direct mailings.
On April 4, 2013, we announced the closure of our entire kiosk sales channel in the U.S. and the United Kingdom. As of
December 31, 2013, we operated three retail kiosks in Japan that were subsequently closed in the first quarter of fiscal year 2014.
Our Global Enterprise & Education distribution channel is focused on targeted sales activity primarily through a direct sales force in five markets: K-
12 schools, colleges and universities, federal government agencies, corporations, and not-for-profit organizations. We also have relationships with third-party
resellers focused primarily on the sale of Lexia products and services.
These customers include primary and secondary schools and colleges and universities.
These customers include government agencies and organizations developing
workforces to serve non-native speaking populations, offering literacy programs and preparing members for overseas missions.
We promote interest in this market with onsite visits, trade show and seminar attendance, speaking engagements and direct mailings.
significant portion of our sales of Lexia Core 5 are generated through our relationships with third-party resellers.
Our strategy is to maintain a flexible, diversified and low-cost manufacturing base for our prepackaged products. We use third-party contract
manufacturers and suppliers to obtain substantially all of our product and packaging components and to manufacture finished products. We believe that we
have good relationships with our manufacturers and suppliers and that there are alternative sources in the event that one or more of these manufacturers or
suppliers is not available. We continually review our manufacturing and supply needs against the capacity of our contract manufacturers and suppliers with a
view to ensuring that we are able to meet our production goals, reduce costs and operate more efficiently.
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