Support.com 2007 Annual Report Download - page 14

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using industry standard web server infrastructure and datacenter practices such as load balancing, clustering and data partitioning. Many of our products are
web-based and provide similar functionality on a variety of web servers, application servers, operating systems and databases. The product architecture has been
used in implementations that scale to several million endpoints. Common services such as user and group management, user-based security, user interface
navigation, database access, extensible markup language handling, reporting and integration are shared by many of our products, allowing for faster product
development.
We apply many of the same core technologies across our enterprise business and our consumer business. The consumer business operates primarily on a
hosted software platform. In some cases, client software is also downloaded to the consumer's machine. Additional core technologies and automated capabilities
have been developed in our Solutions Toolkit to solve specific technology problems that consumers typically face and to aid in the sale of premium technology
support. In addition, through our Service Delivery Management System, we provide a platform for multi-channel sale and delivery of premium technology
support.
We devote substantial resources to research and development. Research and development expense was $9.4 million in 2007, $9.2 million in 2006 and
$11.2 million in 2005.
Intellectual Property
As of December 31, 2007, we had eight patents in the United States. We also hold patents in China, Singapore and Israel and have a number of patent
applications pending in other foreign jurisdictions. We may or may not seek additional patents in the future. We do not know if our current patent applications or
any future patent application will result in a patent being issued with the scope of the claims we seek, if at all. Also, we do not know whether any patents we have
or may receive will be challenged or invalidated. It is difficult to monitor unauthorized use of technology, particularly in foreign countries where the laws may
not protect our proprietary rights as fully as in the United States, and our competitors may develop technology that competes with ours but nevertheless does not
infringe our intellectual property rights.
We maintain a number of trademarks and service marks associated with our business.
We rely on a combination of copyright, trade secret, trademark and contractual protection to establish and protect our proprietary rights that are not
protected by patent. We also enter into confidentiality agreements with our employees and consultants involved in product development. We generally require
our employees, customers and potential business partners to enter into confidentiality agreements before we will disclose any sensitive aspects of our business.
Also, we generally require employees and contractors to agree to assign and surrender to us any proprietary information, inventions or other intellectual property
they generate or come to possess while working for us. These precautions may not prevent misappropriation or infringement of our intellectual property.
Competition
We compete in markets that are highly competitive, subject to rapid change and significantly affected by new product introductions and other market
activities of industry participants. Although we do not believe there is one principal competitor for all aspects of our offerings, we do compete with a number of
other vendors.
In our consumer segment, competitors include electronics retailers that offer premium technology support, companies that offer online technology support
and local computer repair shops. Principal competitive factors in this market include breadth and depth of service offerings; quality of the consumer experience;
pricing; brand recognition; and relationships with industry participants. Certain of our competitors in this market have longer operating histories, significantly
greater financial, technical
10
Source: SUPPORTSOFT INC, 10-K, March 13, 2008