Incredimail 2009 Annual Report Download - page 10

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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 significantly reduced.
Over 73% of our revenues for the year ended December 31, 2009 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. We have been told that Google may
alter its guidelines with respect to homepage resets and default search resets to Google services when providing downloadable
applications. Should Google or the other companies providing the internet browsers effectively restrict, discourage, or otherwise hamper other
companies from offering or changing the search properties, or those providing browsers without a homepage increase their market share, there
would be a material adverse affect on our search generating revenue model and our financial results.
The generation of revenues from searches has become subject to fierce competition. We obtain a significant portion of our revenues
from searches made through our homepage and other search properties. If we cannot compete effectively in this market, our revenues
are likely to decline.
We obtain a significant and growing portion of our revenues from searches made through the Company's home page ( MyStart
), as well
as offering other search properties. We therefore are constantly looking for ways to convince our users to make MyStart
their homepage and
accept the other search properties offered. There are a growing number of companies that generate an increasing amount of their revenues from
searches, some of them with a more significant presence than ours and with greater capability to offer substantially more content. In addition,
with competition growing, even the larger and in the past more conservative companies, (such as Google, Microsoft and others), have become
increasingly aggressive in their search service offering. Therefore, our ability to attract new users to install IncrediMail’
s home page, and
retaining existing users, could suffer, preventing or delaying us in increasing our revenues, or even cause them to decrease.
If we are unable to continually enhance our existing products and develop new products that achieve widespread market acceptance,
our ability to attract and retain customers could be impaired, our competitive position may be harmed and we may be unable to
generate additional revenues.
We believe that the number of downloads of our free products
indicates that many consumers are interested in having a customized
and entertaining email or instant messaging experience. Our future revenue and profit growth will depend, in part, on increasing the number of
downloads and acceptance of the search properties offered with them, and subsequently, the percentage of registered or active users of our free
product who become actual purchasers of our products and services, as well as making our products and services attractive to new users. In order
to induce those consumers to use our products, accept the search properties offered, and subsequently, to a certain extent, purchase or license our
products, we must continually enhance our existing products by offering additional features and content and we must continue to introduce novel
products. The enhancement of existing products and the development and commercialization of new products can be very complex. Software
product development and commercialization depends upon a number of factors, including:
We may be unable to enhance our existing products or to develop new products. Furthermore, we may not develop or introduce new
products or product enhancements in time to take advantage of market opportunities or achieve a significant or substantial level of acceptance in
new or existing markets. If we fail to do so, our ability to attract and retain customers could be impaired, our competitive position may be
harmed and we may be unable to generate substantial revenues.
●
accurate prediction of market requirements, market preferences and content trends and evolving standards;
●
development of advanced technologies and capabilities;
●
timely completion and introduction of new product designs and features that incorporate market requirements and preferences;
●
our ability to recruit and retain highly qualified personnel;
●
our ability to market our new products; and
●
market acceptance of the enhanced and new products.
6