Incredimail 2008 Annual Report Download - page 24

In the past we had initiated numerous other projects such as branded content and a social community site for IncrediMail
®
users, however,
these efforts have been discontinued while we focus on our core competencies. Recently we have also suspended further development of our
Magentic and PhotoJoy products. Management is constantly reassessing its initiatives, in an effort to optimize and leverage its added value and
competitive advantages. Although the above projects are the initiatives currently identified by our management, we cannot assure you that these
projects will be completed as currently contemplated or at all. In addition, future initiatives may take priority over the development of these
projects.
Sales, Marketing and Distribution
Our products are sold throughout the world in more than 100 countries. The following table shows the distribution of our registered email
users and products sold by territory in 2008:
24
To date, we have relied mainly on “viral growth,” arising from recipients of our users’
emails clicking on the link at the bottom of emails sent
with IncrediMail
®
Xe and then downloading our products and from word-of-mouth. In addition, during 2008 we employed traditional marketing
strategies, consisting primarily of online advertising, which efforts were met to our satisfaction. In 2009 in light of the current market conditions
and our focus on profitability, we plan to reduce employing these marketing efforts. We have designed our products to address users’ aversion to
spam, spyware and other perceived offensive Internet marketing tools. To date, we have not been affected by the growing number of installations
by Internet users of “filter” software programs that allow them to block “pop up”
advertisements or to prevent installation of software components
that act as spying agents. The growth of our revenues would be adversely affected if our products, while not doing any of these things, were
subject to being “filtered” by consumers.
During 2006 we opened an office in the United States, which is charged with local corporate communications, business development efforts
and our marketing effort in China. In 2008 as we suspended business development activity in general and in China in particular, in order to focus
on our core competencies the US office has been reduced accordingly.
We have typically experienced stronger sales in the first and fourth quarters, principally because our products are purchased in holiday sales
in December or in the after-holiday sales in January. This is in addition to the general seasonality of the Internet as well as e-commerce, being
more active in the winter months. However, as search generated revenues account for a growing and now dominant portion of our revenues, the
seasonality of our revenues has decreased.
We currently have a Vice President – Marketing and 11 employees in our sales and marketing department.
Intellectual Property
We rely on a combination of patent, copyright, trademark and trade secret laws and confidentiality and invention assignment agreements to
protect our intellectual property rights.
Most of the components of our software products were developed solely by us. We have licensed certain components of our software, such as
a speller function, from third parties. Except for our agreement with Commtouch Ltd. (described below), all of these licenses entailed a one-time
fee or are freeware. We believe that these components are not material to the overall performance of our software and may be replaced without
significant difficulty.
In 2001, we submitted patent applications in the United States, Europe and Israel for the following two inventions:
Registrations
Products Sold
Europe
53
%
36
%
North America
22
%
52
%
South America
11
%
2
%
Oceania
2
%
6
%
Other
11
%
4
%
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system and method for visual feedback of command execution in electronic mail systems; and
—
system and method for intelligent transmission of digital content embedded in electronic mail messages.