Incredimail 2013 Annual Report Download - page 34

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.
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.
Products under Development
Our research and development activities are primarily conducted internally, focusing on the development of new platform-
based
solutions that will offer developers (i) effective distribution tools, (ii) increased monetization capabilities, and (iii) enhanced optimization via
powerful, reliable, and easy-to-
use analytics. Additionally, we focus our research and development efforts on developing new products and
improving existing products through software updates and upgraded features. Our Research &Development department is divided into groups
based on scientific disciplines and types of applications and products.
Breakdown of Revenues
Our solutions and products are distributed and sold throughout the world in more
than 100 countries. The following table shows the
revenues generated by our legacy business and by the ClientConnect business, by territory, in 2013:
In previous years, we divided our sales regions somewhat differently, as set forth below:
In 2012, legacy search and product revenues in the United States, Canada, United Kingdom and Australia represented 47% and 84% of
revenues, respectively, in France, Germany, Italy, Spain, Netherlands, Belgium and Switzerland represented 35% and 8% of revenues,
respectively, and in the rest of the world represented 18% and 8% of revenues, respectively.
In 2011, legacy search and product revenues in the United States, Canada, United Kingdom and Australia represented 42% and 66% of
revenues, respectively, in France, Germany, Italy, Spain, Netherlands, Belgium and Switzerland represented 43% and 23% of revenues,
respectively, and in the rest of the world represented 15% and 11% of revenues, respectively.
Intellectual Property
Although we have a number of patents, copyrights, trademarks and trade secrets and confidentiality and invention assignment
agreements to protect our intellectual property rights, we believe that our competitive advantage depends primarily on our marketing, business
development, applications, know-
how and ongoing research and development efforts. Accordingly, we believe that the expiration of any of our
patents or patent licenses, or the failure of any of our patent applications to result in issued patents, would not be material to our business or
financial position.
Most of the components of our software products were developed solely by us. We have licensed certain components of our software
from third parties. Except for our agreements regarding anti-
spam software and some of our content licenses, most of these licenses entailed a
one-
time fee or are "freeware". We believe that these components are not material to the overall performance of our software and may be
replaced without significant difficulty.
We have six patents in the United States and one in Israel, as well as several patent applications pending in the United States, Israel the
European Union.
Legacy
Search-
Generated
and
Related
Advertising
Revenues
Legacy
Product
Revenues
ClientConnect
Search-
Generated
Revenue
Tier 1
–
North America
35
%
86
%
70
%
Tier 2
–
Europe
47
%
10
%
23
%
Tier 3
–
Other
18
%
4
%
7
%
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