Travelzoo 2002 Annual Report Download - page 22

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Technology
We have designed our technology to serve a large volume of web traÇc in an eÇcient and scaleable
manner.
We co-locate our production servers with Cable & Wireless, a global communications company. Cable &
Wireless' facility includes features such as power redundancy, multiple egress and peering to other ISPs, Ñre
suppression and access to our own separate physical space. We believe our arrangements with Cable &
Wireless will allow us to grow without being limited by our own physical and technological capacity, and will
also provide us with suÇcient bandwidth for our anticipated needs. Because of the design of our website, our
users are not required to download or upload large Ñles from or to our website, which allows us to continue
increasing the number of our visitors and page views without adversely aÅecting our performance or requiring
us to make signiÑcant additional capital expenditures.
Our software is written using open standards, such as Visual Basic Script, and HTML, and interfaces
with products from Microsoft. We have standardized our hardware platform on Compaq servers and Cisco
switches.
New Products and Services
In the second quarter of 2003, we intend to launch a new Travelzoo e-mail product that allows travel
companies to announce time-sensitive and newsworthy sales and specials just as they are released.
Competition
We compete with large Internet portal sites, such as About.com, America Online, Lycos, MSN and
Yahoo!, that oÅer listings or other advertising opportunities for travel companies. We also compete with
smaller sites that specialize in listing last-minute oÅers or list deals for free, such as Smarterliving.com. In
addition, we compete with newspapers, magazines and other traditional media companies that operate
websites which provide advertising opportunities. We expect to face additional competition as other
established and emerging companies, including print media companies, enter our market.
Many of our current and potential competitors have longer operating histories, signiÑcantly greater
Ñnancial, technical, marketing and other resources and larger client bases than we do. In addition, current and
potential competitors may make strategic acquisitions or establish cooperative relationships to expand their
businesses or to oÅer more comprehensive solutions.
New technologies could increase the competitive pressures that we face. The development of competing
technologies by market participants or the emergence of new industry standards may adversely aÅect our
competitive position. Competition could result in reduced margins on our services, loss of market share or less
use of our products by travel companies and consumers. If we are not able to compete eÅectively with current
or future competitors as a result of these and other factors, our business could be materially adversely aÅected.
Government Regulation and Legal Uncertainties
There are increasing numbers of laws and regulations pertaining to the Internet, including laws and
regulations relating to user privacy, liability for information retrieved from or transmitted over the Internet,
online content regulation, user privacy and domain name registration. Moreover, the applicability to the
Internet of existing laws governing issues such as intellectual property ownership and infringement, copyright,
patent, trademark, trade secret, obscenity, libel and personal privacy is uncertain and developing.
Privacy Concerns. Government agencies are considering adopting regulations regarding the collection
and use of personal identifying information obtained from individuals when using Internet sites or e-mail
services. While we have implemented and intend to implement additional programs designed to enhance the
protection of the privacy of our users, these programs may not conform to any regulations adopted which may
be adopted by these agencies. In addition, these regulatory and enforcement eÅorts may adversely aÅect our
ability to collect demographic and personal information from users, which could have an adverse eÅect on our
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