Incredimail 2014 Annual Report Download - page 12

Currently more individuals are using mobile devices to access the Internet, while most of our revenue generation and services are
currently not usable on mobile platforms. Also, web-
based software and similar solutions are impacting the attractiveness of
downloadable software products.
We focus primarily on the market related to personal computers ("PCs"), which has accounted for substantially all the revenues in our
business. As Internet usage continues to shift from PCs to mobile devices, we can expect downward pressure on revenues in general and in our
search business in particular. Recently, the number of individuals who access the Internet through
devices other than PCs, such as mobile
phones, tablets, etc., has increased dramatically. While we have begun developing other models and solutions for mobile platforms and we have
acquired Grow Mobile, Inc. ("Grow Mobile"), and Make Me Reach SAS ("Make Me Reach"), our services, for the most part, are not yet
compatible with these alternative platforms and devices and substantially all our revenue to date has come from PCs. If this trend towards using
the Internet on non-
PC devices accelerates, our services will become less relevant and may fail to attract advertisers and web traffic. In addition,
even if consumers do use our services, our revenue growth will still be adversely affected if we do not successfully implement revenue-
generating models for our mobile applications.
Our revenues, for the most part, are generated by virtue of the end user downloading software to the desktop. Web (or "cloud") based
software and similar solutions do not require the user to download software, and thus provides a very mobile and accessible alternative for PCs,
as compared to downloadable software. While there are advantages and disadvantages to each method and system and the markets for each of
them remain large, the market for web-
based systems is growing at the expense of downloadable software. Should this trend accelerate faster
than our partners’
ability to provide differentiating advantages in their downloadable solutions, this could result in fewer downloads of their
products and lower search revenues generated through the download of these products. See "Item 4.B Business Overview —
Competition" for
additional discussion of our competitive market.
Our reputation has been and may continue to be adversely impacted by the negative reputation of toolbar and search assets take over
businesses generally and other factors.
Our reputation has been and may continue to be negatively impacted by a number of factors, including the negative reputation
associated with toolbars, product and service quality concerns, complaints by publishers or end users or actions brought by them or by
governmental or regulatory authorities and related media coverage and data protection and security breaches. Moreover, the inability to develop
and introduce monetization products and services that resonate with consumers and/or the inability to adapt quickly enough (and/or in a cost
effective manner) to evolving changes to the Internet and related technologies, applications and devices, could adversely impact our reputation,
and, in turn, our business, financial condition and our results of operations.
We rely significantly on our and our partners’
ability to advertise through the Google AdWords network for marketing and acquiring
new users of our products. Should Google continue to make substantial changes to this network or its policies or if it becomes
substantially more expensive, it would be more difficult and expensive to acquire new customers and would negatively affect our
revenues .
Over the last few years our reliance and that of our partners on advertising for acquiring new customers has grown dramatically and is
an integral part of our plans to continue to achieve growth. One of the main venues for advertising downloadable software products is Google’
s
AdWords network. Google sets the standards and the pricing for using this network. Although there are alternative networks and platforms for
advertising, none are currently as popular as Google's. Over the last couple of years, Google has made changes in its rules for using this network
and the way distributers of downloadable software products interact with it, having a negative effect on our revenues and the partners with which
we work. Should Google continue to institute substantial changes, if the cost of advertising software products increases more than it already
has, our ability to market our products would be limited, having a negative effect on our results of operations.
Our financial performance may be materially adversely affected by information technology, insufficient cyber security and other
business disruptions.
Our business is constantly challenged and may be impacted by disruptions, including information technology attacks or failures.
Cybersecurity attacks, in particular, are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to
data, and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected
information and corruption of data and overloading our servers and systems with communications and data. Unidentified groups have hacked
numerous Internet websites and servers, including our own, for various reasons, political, commercial and other. Given the unpredictability of
the timing, nature and scope of such disruptions, we could potentially be subject to substantial system downtimes, operational delays, other
detrimental impacts on our operations or ability to provide products and services to our customers, the compromising of confidential or
otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and
networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have
a material adverse effect on our cash flows, competitive position, financial condition or results of operations. Although these attacks cause
certain difficulties, they have not had a material effect on our business, financial condition or results of operations. However, there can be no
assurance that such attacks can be prevented or that any such incidents will not have a material adverse effect on us in the future.
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