Stamps.com 2002 Annual Report Download - page 10

Table of Contents
Envelope Manager. Envelope Manager is a small private US based company that launched a software-based Internet Postage service
commercially in 2000.
Pitney Bowes, Inc. Pitney Bowes is the current market leader in the traditional postage meter business and had approximately $4.4 billion in
revenues in 2002. Pitney Bowes launched a software-based Internet Postage product in April 2000.
In addition to competing with Internet Postage vendors for market share of Internet Postage sales, we also compete with traditional postage
methods including postage stamps and postage meters. We believe that customers choose our service over other postage methods primarily to
save time and to save costs.
Our service saves customers time in a number of ways. First, our service allows a customer to apply postage to letters or packages at home or at
the office, thus avoiding the time that would ordinarily be spent traveling to the post office. Second, our service has the ability to generate mass
mailings quickly and easily, in a single step process. Finally, our service saves customers time because of its ability to integrate quickly and
easily with most small business productivity applications such as word processors, financial applications and address books.
Our service saves customers cost in many ways. First, it cleanses all addresses for mailings sent using our service so postage is not wasted on
undeliverable mail. Second, it avoids wasted postage by calculating the exact amount of postage that is needed depending on mail class, mail
form, weight and distance to the destination. Third, the software provides the ability to track and control postage expenditures in a small office
using cost codes. Additionally, the monthly service fees we charge are less than a traditional small business postage meter. Finally, customers
using our service to ship packages with electronic delivery or signature confirmation save $0.40 to $0.50 per package compared to using regular
confirmation services at the post office.
Overall, we may not be able to maintain a competitive position against current or future competitors as they enter the markets in which we
compete. This is particularly true with respect to competitors such as Pitney Bowes, with greater financial, marketing, service, support,
technical, intellectual property and other resources than us. Failure to maintain a competitive position within the market could seriously harm
our business, financial condition and results of operations. For further discussion of the competitive risks, see “Risk Factors—If we are unable
to compete successfully, particularly against large, traditional providers of postage products like Pitney Bowes, our revenues and operating
results will suffer.”
Our Internet Postage Service Technology
Our Internet Postage service technology is comprised of the following key components:
System Architecture .Our servers are located in a high-security, data center and operate with internally developed security software. These
servers create the data used to generate information-based indicia. These servers also process postage purchases using secure technology that
meets US Postal Service security requirements. Our service currently uses a Windows-based client application, which supports a variety of
label and envelope options and a wide range of printers. In addition, our application employs an internally-developed user authentication
mechanism for additional security.
Transaction Processing .Our transaction processing servers are a combination of secure, commercially available and internally-developed
technologies that are designed to provide secure and reliable transactions. Our system implements hardware to meet government standards for
security and data integrity. The performance and scalability of our Internet Postage system is designed to allow many users to process postage
transactions through our Web site.
Database Processing .Our database servers are designed and built with industry-leading database technologies and can be scaled easily as
needed.
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2003. EDGAR Online, Inc.