Incredimail 2008 Annual Report Download - page 10

could effectively compete with our existing product lines. Demand for our products could be diminished by equivalent or superior
products and technologies offered by competitors. See “Item 4.B Business Overview – Competition” for additional discussion of our
competitive market. We face significant competition from large-scale web-based email providers, principally Google, Yahoo and
Microsoft .
Our products also compete in the market for web-based email software products and services, such as Google’s Gmail, Yahoo! Mail and
Microsoft’s Hotmail. The web based email market is characterized with significant competition, changing technologies and evolving products and
services enhancements.
Google, Yahoo! and Microsoft are each offering a web-based e-mail service in addition to the many other services they provide, such as
desktop search, local search, instant messaging, photos, maps, video sharing, mobile applications and so on. We expect these competitors to
increasingly use their financial and engineering resources to compete with our client-based e-mail service, if we are unable to successfully
compete with them, our results of operations may be adversely affected.
We are increasingly relying on the ability to offer our search properties to users of our software products and subsequently retain them.
Should this offering be blocked, constrained or made redundant, by the providers of the underlying platform, our ability to generate
revenues from search could be materially reduced.
Over 70% of our revenues for the year ended December 31, 2008 were generated from the acceptance and subsequent retention of our search
properties by the users of our software products. The market for offering and retaining these search properties is very competitive. In addition,
some companies offer a browser without a homepage, which is one of our main search properties. Should the companies providing the internet
browsers effectively restrict other companies from offering or changing the search properties, or should those providing browsers without a
homepage increase their market share, there could be a material adverse affect on our search generating revenue model and our financial results.
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The market for wallpapers, screensavers and photograph management tools is highly competitive, and if we cannot compete effectively,
we may not be able to generate revenues or achieve significant market share.
Our Magentic product is a desktop enhancer and offers brand-new graphically enriched ways to view and enjoy personal photos. Our
PhotoJoy product focuses on further enhances the capability for enjoying personal photos. These products were first introduced in 2006, and
subsequently enhanced in 2008, currently compete in the market for wallpapers, screensavers and PC software managing and presenting personal
photographs, aiming to offer a creative, personal and entertaining experience for PC users. Our main competitors in these areas include
Screensavers.com and webshots©
by American Greetings Corp. (NYSE: AM). Competition with these products, as well as the new concept, could
result in increased investments in R&D and Marketing expenses as well as fewer downloads and registrations of our product.
Many of our competitors have more established brands, products and customer relationships than we do, which could inhibit our market
penetration efforts even if they may not offer a similar variety, currently free of charge, such as American Greetings Corp. (webshots©). If we are
unable to achieve continued market penetration, we will not be able to compete effectively.
In addition, many of our other current and potential competitors have significantly greater financial, research and development,
manufacturing, and sales and marketing resources than we have. These competitors could use their greater financial resources to acquire other
companies to gain enhanced name recognition and market share, as well as to develop new technologies, products or features that could
effectively compete with our product. Demand for our products could be diminished by equivalent or superior products and technologies offered
by competitors. See “Item 4.B Business Overview – Competition” for additional discussion of our competitive market.
The market for creative instant messaging enrichment tools is highly competitive, and if we cannot compete effectively, we may not be
able to generate revenues or achieve significant market share.
In May, 2008, we launched HiYo
TM
, our creative enhancement tool for instant messaging. HiYo is currently available for users of the
instant messenger software Windows Live Messenger
®
, and we believe HiYo will bring in new customers and demographics into the
IncrediMail
®
experience. Our main competitors in this area include SweetIM, Bandoo and SmileyCentral by IAC/InterActiveCorp (Nasdaq:
IACI) as well as the built in graphic capabilities, albeit limited, of Windows Live Messenger
®
. Competition with these products could result in
increased investments in R&D and Marketing expenses as well as fewer downloads and registrations of our product.
Many of our competitors have more established brands, products and customer relationships than we do, which could inhibit our market
penetration efforts even if they may not offer a similar variety, currently free of charge, such as IAC/InterActiveCorp (SmileyCentral). If we are
unable to achieve continued market penetration, we will not be able to compete effectively.
In addition, many of our other current and potential competitors have significantly greater financial, research and development,
manufacturing, and sales and marketing resources than we have. These competitors could use their greater financial resources to acquire other
companies to gain enhanced name recognition and market share, as well as to develop new technologies, products or features that could