Incredimail 2010 Annual Report Download - page 43

R&D
. R&D expenses increased nominally in 2010 after decreasing significantly in 2009. In 2011 we expect these expenses to increase
moderately as a result of our implementing the findings of our consumer research and investing in increasing our product pipeline so as to
diversify our product suite in future years.
Sales and marketing expenses
. Our sales and marketing expenses increased in 2010, after decreasing significantly in 2009. This
resulted from our engaging in depth consumer research and hiring marketing and sales consultants in order to better appreciate what our
consumers need and how best to service these needs. In 2011 we will continue to engage these consultants, although less so. In 2010 we relied
predominantly on the viral nature of our products and our expenditure on customer acquisition costs was $1.8 million, similar to the level of
expenditure in 2009. However, in 2011 we intend to increase this expenditure more than three-
fold, in an effort to increase significantly the
number of downloads and users of our software and search services, as part of our strategy to accelerate revenue growth.
General and administrative expenses
. G&A expenses increased as well in 2010. This increase was a result of our enhancing
management with new and experienced professionals capable of taking the Company to the next level by implementing organic and non-
organic
growth strategies. This effort began with hiring a new CEO with extensive corporate and internet related experience, continued with creating a
Corporate Development department, hiring an experienced VP to manage this department and staffing it, and other investments. We intend to
continue this effort in 2011, enabling us to implement our growth strategy. However, we do not expect G&A expenses to increase significantly
beyond the level established in the latter part of 2010.
Industry trends expected to affect our revenues, income from continuing operations, profitability and liquidity or capital resources :
1.
In recent years, we have witnessed an increase in the use of web
-
based e
-
mail solutions such as Microsoft Hotmail, Yahoo! Mail and
Google’
s Gmail. Facebook Mail is relatively new addition to this market, having a lot of potential based on its social network
popularity. While our product is based on the use of these email products, and there is still a vast market for PC based email clients, there
is no doubt that the popularity of web-
based email is growing at the expense of the PC based software. This has caused us to increase
our efforts in adapting our product to the specific consumer needs not satisfied by the web
-
based solution.
2.
As a result of our in depth consumer research and the success of our email client, we have found that our products address an
underserved market of later technology adapters. We have found that these consumers are looking for simple, safe and useful products
that assist in better utilizing their time. We intend to address this unique market segment by further adapting our products to better
address their evolving requirements as well as offering them other products and services that they use frequently and address similar
needs. This market segment is currently underserved as it is not targeted by the new technology companies that are targeting early hi-
tech adapters, or by the large conglomerates that seek to service horizontally the general public, rather than a specific vertical
demographic. We believe that we on the other hand with our successful experience with our IncrediMail email client, are well equipped
to address these needs.
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