Incredimail 2009 Annual Report Download - page 12

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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 customized and entertaining email experience similar to IncrediMail
®
.
For example, consumers
may choose to receive an extensive package of Internet and email services from a more dominant and recognized company, such as Microsoft
Corporation (Outlook Express) or America Online, Inc. (AOL
®
).
If we are unable to achieve continued market penetration, we will be unable to
compete effectively.
In addition, many of our other current and potential competitors have significantly greater financial, research and development 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 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, and if we are unable to successfully
compete with them, our results of operations may be adversely affected.
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
®
, Yahoo! Messenger
®
and American Online Instant Messaging (AIM
®
),
and we believe
HiYo will bring 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
®
, Yahoo! Messenger
®
and AIM
®
.
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. 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 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.
HiYo is an add-on tool to proprietary instant messaging platforms, which may not always be available to us.
While our email client and digital photography products are stand alone software products, connecting to open email providers and
digital photograph depositories or data bases, HiYo relies on our ability to add our toolbar to proprietary instant messaging platforms. Such
proprietary instant messaging platforms may become unavailable for such add-
on use by us, which would result in our inability to continue
marketing this product as it is, causing this revenue source to decrease rapidly.
8