Stamps.com 2007 Annual Report Download - page 9

Download and view the complete annual report

Please find page 9 of the 2007 Stamps.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 70

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70

Pitney Bowes, Inc. Pitney Bowes is the current market leader in the U.S. traditional postage meter business, with revenues
of approximately $6.1 billion in 2007. Pitney Bowes launched a software-based PC Postage product called ClickStamp Online in
2000. In the third quarter of 2004, Pitney Bowes appeared to discontinue marketing ClickStamp Online at the monthly fee of
$4.99, and began marketing an entirely new PC Postage offering by the name of ShipStream for a monthly fee of $18.99. During
2004, Pitney Bowes also began offering an Internet-based service for printing a single label for use in shipping a package that
does not require a monthly subscription fee, in partnership with eBay. Pitney Bowes offers a customized postage offering
(branded ZazzleStamps) through a partnership with Zazzle.com, Inc., a small, private U.S. company that specializes in custom
products. During 2007, Pitney Bowes launched a product by the name of YourStamps in partnership with FujiFilm and its own
customized postage offering under the brand name Stamp Expressions.
We also compete with traditional postage meters offered by Pitney Bowes and others in the U.S. market. We believe that our
customers choose our PC Postage service over traditional postage meters primarily to save money. We also believe that our PC
Postage service can offer superior capabilities to postage meters in certain areas, such as the ability to integrate tightly with small
business productivity applications, and the ability to easily monitor and track USPS packages. We believe customers choose
postage meters over our solutions because of the perceived ease of use of these products versus our current approach of software
that runs on a PC.
We believe that our customers choose our PC Postage service over that of other PC Postage competitors because of our more
complete and sophisticated overall service offering. For example, we are the only PC Postage service that is tightly integrated
into the native capabilities of Microsoft Office for use with Office’s mailing capabilities such as mail merge or envelope
printing. Based on USPS data and our own estimates, we believe that as of the end of 2007 approximately 85% of all PC Postage
subscription customers were our customers (excluding any customers paying for postage on a pure transaction-based, no-
monthly-fee plan).
Based on USPS data and on our own estimates, we believe that PhotoStamps is the category leader in USPS’s customized
postage program. When compared to competitive offerings, we think PhotoStamps offers the best product and overall customer
experience in the industry. PhotoStamps was also the first commercially available customized postage product and we believe it
has the best brand recognition among its competitors.
Other Competition. We also compete with traditional methods of accessing US postage, such as postage stamps, USPS
retail locations, and USPS online services such as Click-N-Ship. All of these methods are typically available with no additional
markup over the face value of postage. We believe that our customers choose our service over these methods of accessing
postage because of convenience and the availability of capabilities and features that are not available through these traditional
methods. We believe customers choose traditional methods over our solutions as a way to obtain postage without paying
additional fees above the face value of postage.
Industry Overview
Business Market Size
Our PC Postage mailing and shipping service is currently targeted primarily at U.S. small offices, home offices, small
businesses, consumers and enterprises. Based on data from market research firm IDC published in 2005, we estimate the number
of businesses that we can serve with our current products as follows: (1) 14 million income-generating home offices; (2) 4.4
million single location small businesses of 5 employees or less (typically using our single user service); (3) 1.5 million single
location small businesses of 6 to 100 employees (typically using our multi-user service); (4) 2.1 million multi-location small
businesses which represent 4.7 million separate locations (typical using our multi-location service); (5) 117 thousand medium
and large businesses over 100 employees which represent 1.3 million separate locations (typically using our enterprise service).
In total we estimate that there are 22 million businesses which represent 26 million locations which are the primary target for our
current service (prior to our launch of our multi-user and multi-location capabilities, we estimate that our single user solution
effectively addressed the needs of 19 million businesses). In addition our solution is also applicable to non-income generating
home offices such
6
TABLE OF CONTENTS
as those used for corporate after-hours work or telecommuting, and IDC estimates those at 24 million. We also have a large
number of consumers that use our service.
US Mail Volume