Shutterfly 2009 Annual Report Download - page 17
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We believe the primary competitive factors in attracting and retaining customers are:
We believe that we compete favorably with respect to many of these factors, particularly customer trust and loyalty, quality and breadth of
products and services, and customer service. Many of our competitors promote their products on the basis of low prices or the convenience of
same-
day availability for digital photos printed in drugstores or other retail outlets. As a general matter, we currently plan to distinguish
ourselves from such competitors principally on the basis of product quality and innovation, rather than price or same-day delivery.
The level of competition in our industry has been consistently high since our inception in 1999, and is likely to increase as current
competitors improve their offerings and as new participants enter the market or as industry consolidation further develops. These competitors
have or could develop a variety of competitive advantages over us, including significantly longer operating histories; larger and broader
customer bases; greater brand recognition; greater financial, research and development and distribution resources; and greater ability to acquire,
invest in or partner with traditional and online competitors. Well-
funded new entrants may choose to prioritize growing their market share and
brand awareness instead of profitability. We may be unable to compete successfully against current and future competitors, and competitive
pressures could harm our business and prospects.
Intellectual Property
Protecting our intellectual property rights is part of our strategy for continued growth and competitive differentiation. We seek to protect our
proprietary rights through a combination of patent, copyright, trade secret and trademark law. We enter into confidentiality and proprietary rights
agreements with our employees, consultants and business partners, and control access to and distribution of our proprietary information. In
2008, we entered into two licensing arrangements with two different third parties for certain of our patented technology. Under the terms of the
licenses, we received initial payments in 2008 and expect to receive additional payments in 2009 and 2010. We seek to enter into other similar
arrangements with third parties who seek to use our patented technology.
•
brand recognition and trust;
•
quality of products and services;
•
breadth of products and services;
•
user affinity and loyalty;
•
customer service;
•
ease of use;
•
convenience; and
•
price.
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