8x8 2004 Annual Report Download - page 9

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6
use a maximum total data bandwidth between 84 kilobits per second and 640 kilobits per second. The video quality
of the call varies with the data bandwidth selected and other network conditions. The DV326 videophone is
designed to be compatible with other SIP protocol devices. We expect to begin shipping the DV326 videophone in
the second half of 2004.
Sales, Marketing and Promotional Activities
We currently sell and market our Packet8 and Packet8 Virtual Office services to end users through our direct sales
force, web site and third party resellers. In addition, we are marketing the wholesale voice and video service
offering to Internet service providers, cable television companies and digital subscriber line, or DSL, providers.
Packet8 is offered to these third parties through reseller agreements, hosted and prepaid service agreements or OEM
technology license agreements. To date, we have not incurred significant advertising and promotional expenses as
we have not had the working capital to fund significant mass media advertising expenditures.
We offer individuals and businesses the opportunity to become resellers of our Packet8 services through our affiliate
and reseller programs. Resellers are able to purchase bulk Packet8 accounts and hardware at reseller specific rates
that they are then able to resell these accounts to private individuals under the Packet8 brand.
Competition
Competitors for the Packet8 service include AT&T, iConnectHere, Net2Phone, Voicepulse and Vonage, as well as
incumbent telephone carriers, and other providers of traditional and legacy telephone service. Our videophone
competes with other providers of videophones and videoconferencing systems, including Vialta, Innomedia, Ojo,
Viseon and various software offerings that implement videophone functionality on a personal computer.
Operations
We have a centrally managed platform consisting of data management, monitoring, control and billing systems,
which support all of our products and services. We have invested substantial resources to develop and implement
our real-time call management information system. Key elements of this system include: customer provisioning,
customer access, fraud control, network security, call routing, call monitoring, media processing and normalization,
call reliability and detailed call records. Our platform monitors our process of digitizing and compressing voice into
packets and transmitting these packets over data networks around the world. We maintain a softswitch, which is a
software-based product that manages call admission, call control, call rating and routes calls to an appropriate
endpoint. Unless the recipient is using an Internet telephony device, the packets (representing a voice and/or video
call initiated by a Packet8 subscriber) are sent to a gateway belonging to one of our partner telecommunications
carriers where the packets are reassembled and the call is transferred to the PSTN and directed to a regular telephone
anywhere in the world. Our billing and back office systems manage and enroll customers and bill calls as they
originate and terminate on the service.
Network Operations Center
We maintain a Network Operations Center at our headquarters in Santa Clara, California and employ a staff of
individuals with experience in both voice and data operations to provide twenty-four hour support to our subscribers.
Additional network operations support is provided by our engineers in Sophia Antipolis, France. We use various
tools to monitor and manage all elements of telephone calls in real-time. Additionally, our Network Operations
Center provides technical support to troubleshoot equipment and network problems.
Customer and Technical Support
We maintain a call center at our headquarters in Santa Clara, California and have a staff of employees and
contractors that provide customer service and technical support to customers. We also provide customer service and
technical support directly to our resellers, and certain resellers provide their own support directly to their sub-
resellers and end users. Customers who access our services directly through the web site receive customer service
and technical support through multilingual telephone communication, web-based customer service, and e-mail
support.