Chegg 2013 Annual Report Download - page 71

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Our platform functions on software that is highly technical and complex and may now or in the future
contain undetected errors, bugs, or vulnerabilities. Some errors in our software code may only be discovered after
the code has been deployed. Any errors, bugs, or vulnerabilities discovered in our code after deployment,
inability to identify the cause or causes of performance problems within an acceptable period of time or
difficultly maintaining and improving the performance of our platform, particularly during peak usage times,
could result in damage to our reputation or brand, loss of students, colleges and brands, loss of revenue, or
liability for damages, any of which could adversely affect our business and financial results.
We expect to continue to make significant investments to maintain and improve the availability of our
platform and to enable rapid releases of new features and products. To the extent that we do not effectively
address capacity constraints, upgrade our systems as needed and continually develop our technology and network
architecture to accommodate actual and anticipated changes in technology, our business and operating results
may be harmed.
We have a disaster recovery program to transition our operating platform and data to a failover location in
the event of a catastrophe and have tested this capability under controlled circumstances, however, there are
several factors ranging from human error to data corruption that could materially lengthen the time our platform
is partially or fully unavailable to our student user base as a result of the transition. If our platform is unavailable
for a significant period of time as a result of such a transition, especially during peak periods, we could suffer
damage to our reputation or brand, loss of students, colleges and brands or loss of revenue any of which could
adversely affect our business and financial results.
Growing our student user base and their engagement with our platform through mobile devices depends upon
the effective operation of our mobile applications with mobile operating systems, networks and standards that
we do not control.
There is no guarantee that students will use our mobile applications, such as the mobile version of our
website, m.chegg.com, Chegg Flashcards and Chegg Guided Solutions, rather than competing products. We are
dependent on the interoperability of our mobile applications with popular mobile operating systems that we do
not control, such as Android and iOS, and any changes in such systems that degrade our products’ functionality
or give preferential treatment to competitive products could adversely affect the usage of our applications on
mobile devices. Additionally, in order to deliver high quality mobile products, it is important that our products
work well with a range of mobile technologies, systems, networks and standards that we do not control. We may
not be successful in developing relationships with key participants in the mobile industry or in developing
products that operate effectively with these technologies, systems, networks or standards. In the event that it is
more difficult for students to access and use our application on their mobile devices, or if students choose not to
access or use our applications on their mobile devices or use mobile products that do not offer access to our
applications, our student growth and student engagement levels could be harmed.
If we are not able to maintain the compatibility of our eTextbook Reader with third-party operating systems,
demand for our eTextbooks may decline and have an adverse effect on our operating results.
Our eTextbook Reader is designed to provide students with access to eTextbooks from any device with an
Internet connection and an Internet browser, including PCs, iPads, Android tablets, Kindles, Nooks and mobile
phones. Our eTextbook Reader can be used across a variety of third-party operating systems. If we are not able to
maintain the compatibility of our eTextbook Reader with third-party operating systems, demand for our
eTextbooks could decline and revenue could be adversely affected. We may desire in the future to make our
eTextbook Reader compatible with new or existing third-party operating systems that achieve popularity within
the education marketplace, and these third-party operating systems may not be compatible with our designs. Any
failure on our part to modify our applications to ensure compatibility with such third-party operating systems
could reduce demand for our products and services.
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