Stamps.com 2002 Annual Report Download - page 8

Table of Contents
Each bar code contains a 1028-bit digital signature to guarantee that each indicium is unique and essentially fraud proof.
The goals of the Information Based Indicia Program were to enhance user convenience with a new access channel for postage that was available
24 hours a day, seven days a week, while also enhancing the inherent security of the postage to reduce overall postage fraud. All Internet
Postage products, including any subsequent enhancements or additional implementation of an existing product, must complete US Postal
Service testing and evaluation to ensure operational reliability, financial integrity and security before becoming certified for commercial
distribution. The Information Based Indicia Program also aims to produce mail that is processed more smoothly in order to reduce US Postal
Service costs.
We believe that the Information Based Indicia Program has created an attractive alternative channel for the sale of postage, particularly to small
offices, home offices and small businesses. We believe that our current customers have chosen our service over other forms of postage such as
postage stamps or postage meters primarily to save time and to save costs.
The Certification Process
All US Internet Postage products must complete extensive US Postal Service testing and evaluation in the areas of operational reliability,
financial integrity and security to become certified for commercial distribution. Each additional implementation of a particular product or
function requires additional evaluation and approval by the US Postal Service prior to commercial delivery.
The US Postal Service certification process for Internet Postage is a standardized, ten-stage process. Each stage requires US Postal Service
review and authorization to proceed to the next stage of the certification process. The US Postal Service has no published timeline or estimated
time to complete each of the ten stages of the program. The most significant stage is the ninth stage, which requires a vendor to complete three
phases of beta testing.
The entire approval process for Stamps.com took approximately two and one half years. In March 1997, we submitted our letter of intent to join
the Information Based Indicia Program. From March 1997 through August 1998, we progressed through the first eight stages of the US Postal
Service certification process. On August 24, 1998, the US Postal Service announced that we were approved for beta testing and our Internet
Postage service became the first software-only postage solution approved by the US Postal Service for market testing. Between August 24,
1998 and August 9, 1999, we successfully completed the three-phase beta testing required by the USPostal Service’ s certification process. On
August 9, 1999, we became the first software-only Internet Postage solution approved for commercial release by the US Postal Service.
On July 17, 2002, we successfully launched NetStamps and became the first provider of this PC Postage technology. Approval for NetStamps
followed years of development efforts, including a six-month beta field test. Additionally, on November 29, 2002, we launched our Plain Paper
Shipping feature after significant development efforts.
Our Marketing of Internet Postage
Our Internet Postage service is currently targeted primarily at small businesses, home offices and individuals. We market our Internet Postage
service in several ways, including the following:
Web Partner Channel. In this channel, we work with strategic partners in order to leverage their Web site traffic, Web customer bases or other
distribution in order to distribute our Internet Postage software. These partnerships provide our potential customers the opportunity to download
our software and access our Internet Postage service from several different places on the Web. For example, we have a partnership with
Microsoft
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2003. EDGAR Online, Inc.