Incredimail 2012 Annual Report Download - page 32

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:
With respect to our communication products, we have competition on both the desktop and the mobile platforms. On the desktop, our
main competition is with web-
based email software products, such as Google's Gmail, Yahoo!'s Mail and Microsoft's Hotmail, each providing
solutions that don't require the download of an email client. On the mobile platforms, we see competition from alternative email clients, such as
Mailbox, Inky, Mailbird and Sparrow. The web-
based and mobile email market is characterized by significant competition, changing
technologies and evolving product and service enhancements.
Google, Yahoo! and Microsoft each offer 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. 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.
In the mobile space, some of these applications offer more advanced utility features, leveraging this for broader distribution.
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.
With respect to our Smilebox photo sharing product, Smilebox competes broadly within the photo services category. Competition
includes America Greetings and Hallmark from the greetings category, Shutterfly, and Snapfish from the photo products category and services
like Flikr, Facebook and Instagram in the social photo sharing category.
In addition, as a major part of our revenues stem from our offering of search properties, we compete with the search engine providers
themselves such as Google, Bing and others. In addition, we compete with many other companies offering consumer downloadable software,
albeit totally different software, utilizing the same strategy, to offer their search properties, such as Interactive Corporation, AOL, AVG
Technologies, Babylon and others.
Finally, many of our current and potential competitors have significantly greater financial, research and development, back-
end
analytical systems, 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, enhanced systems and
analytical capabilities, products or features that could effectively compete with our existing product lines and search service. Demand for our
products and search services could be diminished by products, services and technologies offered by competitors, whether or not their products
and technologies are equivalent or superior.
• 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;
• maintaining our reputation for safe and reliable products; and
•
development of successful marketing channels.
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