Tucows 2012 Annual Report Download - page 9

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4
Customers
The majority of the customers to whom we provide Reseller Services are generally either web hosts or ISPs. A
small number are consultants and designers providing our services to their business clients. Our Retail Services
customers are a very broad mix of consumers, small businesses and corporations.
No customer represented more than 10% of our consolidated revenues in any of the last three fiscal years.
While web hosts and ISPs are capitalizing on the growth in Internet usage and the demand for new services,
they also face significant competition from numerous other service providers with competitive or comparable offerings.
This has led such web hosts and ISPs to focus on core competencies, as such resellers are increasingly seeking to
outsource non-core services. Outsourcing enables these resellers to better focus on customer acquisition and retention
efforts by eliminating the need to own, develop and support non-core applications in-house.
Seasonality
During the summer months and certain other times of the year, such as major holidays, Internet usage often
declines. As a result, many of our services (OpenSRS, Hover and Butterscotch) may experience reduced demand during
these times.
For example, our experience shows that new domain registrations and traffic on our download site decline
during the summer months and around the year-end holidays. Seasonality may also affect advertising, which may have a
slight impact on both the content group and the domain name portfolio’s advertisement-based revenue. These seasonal
effects could cause fluctuations in our financial results as well as the content site’s performance statistics reported and
measured by leading Internet audience measurement services such as comScore.
Competition
Our competition may be divided into the following groups:
• Retail-oriented domain registrars, such as GoDaddy and Web.com through its acquisition of Networ
k
Solutions and Register.com, who compete with our Resellers and our own retail operations for end-users.
• Wholesale-oriented domain registrars, such as Demand Media through its acquisition of eNom, Wild Wes
t
Domains (a division of GoDaddy) and Melbourne IT, who market services to resellers such as our customers.
• Wholesale Email Service providers, such as Google, Yahoo!, Microsoft, Bluetie and MailTrust.
• Ad-supported content providers, such as CNET’s Download.com.
We expect to continue to experience significant competition from the competitors identified above and, as our
business continues to develop, we expect to encounter competition from other providers of Internet services. Service
providers, Internet portals, web hosting companies, email hosting companies, outsourced application companies, country
code registries and major telecommunication firms may broaden their services to include services we offer.
We believe the primary competitive factors in our Reseller Services are:
• Providing superior customer service by anticipating the technical requirements and business objectives o
f
resellers and providing them with technical advice to help them understand how our services can be
customized to meet their particular needs.
• Providing cost savings over in-house solutions by relieving resellers of the expense of acquiring an
d
maintaining hardware and software and the associated administrative burden.
• Enabling resellers to better manage their relationships with their end-users.
• Facilitating scalability through an infrastructure designed to support millions of transactions across millions o
f
end-users.