8x8 2004 Annual Report Download - page 7

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existing system infrastructure to enhance the support we can provide to new and existing subscribers,
as well as our distribution partners. In an emerging industry with world-changing technologies, we are
focused on our customers and their experience with Packet8.
• Develop additional distribution channels. We have established relationships with several resellers and
distributors of telecommunications products. To further accelerate growth of our Packet8 consumer
and enterprise offerings, we intend to build upon our existing relationships and establish new
relationships with distributors, value added resellers and system integrators, other service providers
and retailers to make our products more readily available and accessible to potential customers of our
service.
Our Packet8 Solution
Packet8 is an Internet-based communication service that works on the Internet or virtually any ethernet network in
the world, and allows calls to or from any phone in the world, whether that phone is an IP phone or a regular public
switched telephone network, or PSTN, phone on the PSTN network. Packet8 utilizes IP communication endpoints
(i.e., a desktop adapter) which, when used in conjunction with the Packet8 network software and any standard
telephone, enable plug and play installation and a familiar dialtone user interface. The Packet8 service also uses
web-based technologies to enable account setup, account management, billing and customer support. We have
developed substantially all of the underlying technologies of our Packet8 service, which works with third party
carriers to terminate VoIP calls on the PSTN network. As part of the Packet8 service, we currently resell private-
branded telephone IP terminal adapters, which allow a regular analog telephone to be connected to an IP network,
and IP videophones. These devices, which are manufactured by certain of our semiconductor customers, utilize our
semiconductor technology and certain unique software modifications to the protocol and application code that
enable them to take advantage of 8x8’s Packet8 IP services platform. The designs of these devices are based on our
semiconductor reference designs. We continue to enhance and develop new functionality in the software code that
is embedded in these devices.
Products and Services
PACKET8 VoIP & VIDEO TELEPHONE SERVICE
Our Packet8 VoIP telephone service was introduced in November 2002. Customers enter into a service agreement
with us, and select a calling plan based on their anticipated use of the service. Service plans provide various minutes
of usage, up to unlimited, for calls in North America and Canada that are made to non-Packet8 customers.
Subscribers are charged at a per-minute rate for international calls to non-Packet8 customers, and, depending on the
level of plan selected, may be charged for calls to the PSTN if they exceed the minutes allowed under their plan.
Depending on the service plan selected, 8x8 will either sell or provide at no cost to the user an 8x8 Desktop
Terminal Adapter model DTA310 or Desktop Videophone model DV326 to use with the Packet8 service. Each
subscriber is assigned a telephone number in any of the area codes and underlying rate centers currently offered by
the service. We currently offer area codes in forty-five U.S. states. All Packet8 customers receive access to a
variety of telephone features, including voice mail, caller ID, call forwarding, call waiting, 3-way calling, online
account management and billing, international call blocking and caller ID blocking. We are also offering video over
IP service using our DV325 and DV326 videophone products. We expect to launch new video service plans in the
second half of calendar 2004.
PACKET8 VIRTUAL OFFICE BUSINESS TELEPHONE SERVICE
Our Packet8 Virtual Office business class telephone service was launched in March 2004 and is targeted at the small
office, home office (SOHO) business market. Packet8 Virtual Office is an easy-to-use alternative to traditional PBX
systems or Centrex class services from legacy telecommunications providers, and provides features and services that
neither can provide. Packet8 Virtual Office allows users anywhere in the world to be part of a virtual PBX that
includes automated attendants to assist callers, conference bridges, extension-to-extension dialing and ring groups,
in addition to a rich variety of other business class PBX features normally found on dedicated PBX equipment.
Packet8 Virtual Office subscribers have the ability to choose any phone number available to Packet8 subscribers
(including number portability from other service providers) regardless of a user's geographic location. Each
extension in the virtual PBX can be located anywhere in the world where there is access to the Internet. Packet8