Stamps.com 2008 Annual Report Download - page 9

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TABLE OF CONTENTS
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 (an OEM version of Endicia’s PC Postage service) 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
superior user interface and our larger breadth of features. 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, we support more address books than any other PC Postage software, and we are the only company that offers
additional customer choice in on our Themed and Photo NetStamps labels. Based on USPS data and our own estimates, we
believe that as of the end of 2008 approximately 85% of all PC Postage subscription customers were our customers (excluding
estimated 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 and enterprises, and within these segments we target both mailers and shippers. We believe the number of businesses
that we can serve with our current products are 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) 117,000 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 that 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 we believe there are 24 million non-income generating home offices such as those
used for corporate after-hours work or telecommuting, and our solution is also applicable to that segment. We also have
consumers that use our service.
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TABLE OF CONTENTS
US Mail Volume