Incredimail 2012 Annual Report Download - page 30

Digital photo vertical:
Products under Development
Our research and development activities are conducted internally with a 117 person research and development staff. Our research and
development efforts are focused on the development of upgraded software and, new features and enabling new platforms for our existing product
suite.
In 2012 we increased our development investment effort, focusing on enhancing our product pipeline in general and on mobile
platforms in particular. These efforts produced the mobile Smilebox application for the iPhone this year, and our IncrediMail email client
application for the iPad released in the first quarter of 2013 We intend to continue this effort in 2013 by introducing additional products and
focusing on adapting our existing products for use on mobile platforms, including the iPhone, iPad, Android and possibly Windows Mobile
platforms as well. In addition, we intend to continue enhancing our back-
end systems, supporting our analytical capabilities and our growth, as
well as developing an ad-serving platform enabling us to significantly increase our non-search advertising revenues.
Sales, Marketing and Distribution
Our products are distributed and sold throughout the world in more than 100 countries. The following table shows the search generated
revenues and products sold by territory in 2012:
(*)
(*)
Tier 1: United States, Canada, United Kingdom & Australia; Tier 2: France, Germany, Italy, Spain, Netherlands, Belgium,
Switzerland; Tier 3: Other
As of December 31, 2012, we had 50 employees in our sales and marketing department.
Seasonality
In the past we relied mainly on "viral marketing" to increase our user base. However, since 2011 we have been significantly increasing
our investment in marketing with customer acquisition efforts aimed at accelerating our growth. This has brought dramatic growth in the number
of downloads, registered users, and as a result, revenues in general and search generated revenues in particular.
We have typically experienced stronger product 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 especially so regarding our Smilebox photo-
sharing software. This is
in addition to the general seasonality of the Internet as well as e-
commerce being more active in the winter months. In recent years, as search
generated revenues accounted for a growing and more dominant portion of our revenues, the seasonality of our revenues has decreased. The
more product sales we have as a portion of our total sales, the greater the seasonality.
• Smilebox is an Internet photo sharing service available for the desktop and smart-phone.
o
On the desktop, Smilebox can be used both on the PC and the Mac, making it easy to create digital creations from
personal photos using a range of digital designs including invitations, greetings, collages, scrapbooks, photo albums
and slideshows. These creations can then be shared free of charge via email, Facebook, Twitter, Print, DVD or photo
frames. Revenues are generated from subscriptions for premium content and features, advertising from creations that
are shared for free, printing revenues from creations that are printed to store or printed and shipped to home and
search revenues for consumers that elect to have Smilebox provide their default search results.
o
Smilebox is also available free of charge for the iPhone, making it easy to personalize and share photos in real time,
directly from the device. Personalization options include captions, stickers and frames, and sharing options include
email, Facebook and SMS.
Search Generated
Revenues
Product Revenues
Tier 1
47%
84%
Tier 2
35%
8%
Tier 3
18%
8%
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