Incredimail 2010 Annual Report Download - page 31

Our ability to compete effectively depends upon our ability to distinguish our Company and our products from our competitors and
their products, and includes the following factors:
Our main competition is with web-
based email software products, 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.
In addition, there is some competition in the area of downloadable email clients, such as: WikMail, Arcsoft Multimedia Email™ 3 and
Mind Spark Products™. In addition, our products also face competition from general email software programs offered to the private market by
large Internet and software companies, such as AOL9 by America Online, Inc., Eudora
®
by QUALCOMM Incorporated (Nasdaq: QCOM),
Thunderbird
®
by Mozilla Corporation and Outlook Express by Microsoft Corporation (Nasdaq: MSFT), some of which may also incorporate
certain special features that provide a personalized email experience, some of them offering creative graphic backgrounds, such as Yahoo!
Mail™. Many of the large Internet and software companies offer their email software programs free of charge. Our Magentic and PhotoJoy
products’
main competitors, in area of providers of wallpapers, screensaver and digital photo management offer the following products: Picasa,
webshots.com and screensavers.com, which offer wallpapers and screensavers both free and premium products for a fee. Our HiYo product's
main competitors, in the area of creative instant messenger tools, are SweetIM, Bandoo, Imminent and SmileyCentral by IAC/InterActiveCorp.
Competition with these products, reliance on viral marketing and technical difficulties have resulted in a reduction of the number of downloads,
market share, prices and margins.
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 solution that is as simple to use, or that provides 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, as a major part of our revenues stem from our offering search properties by means of offering consumer downloadable
software, other companies with consumer downloadable software, albeit with totally different software, are competing by utilizing the same
strategy, to offer their search properties.
Finally, 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 existing product lines. Demand for our products could be diminished by products and technologies offered by
competitors, whether or not their products and technologies are equivalent or superior.
Government Regulation
U.S., U.K., the European Union, Israeli and other jurisdictions have adopted laws that could have an impact on our business, including
the ones described in this section.
•
the simplicity of use
• product quality;
•
product pricing;
•
the creativity, variety and volume of content accessible through our software;
• success and timing of new product development and introductions;
•
quality of customer support;
• maintaining our reputation for fighting spam and offering spyware-free products; and
•
development of successful marketing channels.
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