Tucows 2014 Annual Report Download - page 17

ITEM 1A. RISK FACTORS
Our business faces significant risks. Some of the following risks relate principally to our business and the
industry and statutory and regulatory environment in which we operate. Other risks relate principally to the securities
markets and ownership of our stock. The risks described below may not be the only risks we face. Additional risks that we
do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the events
or circumstances described in the following risk factors actually occur, our business, financial condition or results of
operations could suffer, and the trading price of our common stock could decline.
Risks Related to Our Business and Industry
We may not be able to maintain or improve our competitive position and may be forced to reduce our prices because of
strong competition in the market for Internet services generally and domain name registration, in particular, which we
expect will continue to intensify.
The market for Internet services generally and domain registrations in particular is intensely competitive and
rapidly evolving as participants strive to protect their current market share and improve their competitive position, and we
expect competition to intensify in the future. Most of our existing competitors are also expanding the variety of services
that they offer. These competitors include, among others, domain name registrars, website design firms, website hosting
companies, Internet service providers, Internet portals and search engine companies, including Google, Microsoft,
Web.com, GoDaddy, VeriSign and Yahoo!. Competitors like Microsoft, Google and Yahoo!, as well as other large
Internet companies, have the ability to offer these services for free or at a reduced price as part of a bundle with other
service offerings. If these companies decide to devote greater resources to the development, promotion and sale of these
new products and services, greater numbers of individuals and businesses may choose to use these competitors as their
starting point for creating an online presence and as a general platform for running their online business operations. In
particular, VeriSign may in the future decide to offer additional services that compete with our domain name registration
services or other services. If VeriSign were to become a competitor of ours in our core business areas, VeriSign would
likely enjoy a number of competitive advantages, including its position as the largest registry, as well as superior financial
and operational resources and customer awareness within our industry.
In addition, these and other large competitors, in an attempt to gain market share, may offer aggressive price
discounts on the services they offer. These pricing pressures may require us to match these discounts in order to remain
competitive, which would reduce our margins, or cause us to lose customers who decide to purchase the discounted
service offerings of our competitors. As a result of these factors, in the future it may become increasingly difficult for us
to compete successfully.
We also face significant competition from other existing registrars and the continued introduction of new
registrars in the domain registration industry. Currently ICANN has over 1,400 registrars who register domain names in
one or more of the generic top level domains, or gTLDs, that it oversees. Not all of these accredited registrars, however,
are operational. There are relatively few barriers to entry in this market, so as this market continues to develop we expect
the number of competitors to increase. The continued entry into the domain registration industry and the rapid growth of
some competitive registrars and service providers who have already entered the industry may make it difficult for us to
maintain our current market share. As a result, we may not be able to compete effectively.
In addition, we cannot predict the impact ICANN’s New gTLD Program will have on the domain name industry.
The New gTLD Program's goals include enhancing competition and consumer choice, and enabling the benefits of
innovation via the introduction of a wide range of New gTLDs. As of February 26, 2015 ICANN has delegated and
introduced over 520 of these New gTLDs into the Root Zone. We believe that the introduction of the wide range of New
gTLDs, once completed, will result in an increase in the number of domains we register and related revenues
commencing in 2014. In addition, while the delegation of New gTLDs could substantially change the domain name
industry in unexpected ways, we believe that the New gTLD Program will provide us with new revenue opportunities.
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