Tucows 2014 Annual Report Download - page 49

We may be unable to respond to the rapid technological changes in the industry, and our attempts to respond may
require significant capital expenditures.
The Internet and electronic commerce are characterized by rapid technological change. Sudden changes in user
and customer requirements and preferences, the frequent introduction of new applications and services embodying new
technologies and the emergence of new industry standards and practices could make our applications, services and
systems obsolete. The emerging nature of applications and services in the Internet application and services industry and
their rapid evolution will require that we continually improve the performance, features and reliability of our applications
and services. Our success will depend, in part, on our ability:
• to develop and license new applications, services and technologies that address the increasingly sophisticated
and varied needs of our current and prospective customers; and
• to respond to technological advances and emerging industry standards and practices on a cost-effective and
timely basis.
The development of applications and services and other proprietary technology involves significant
technological and business risks and requires substantial expenditures and lead-time. We may be unable to use new
technologies effectively or adapt our internally developed technology and transaction- processing systems to customer
requirements or emerging industry standards in a timely manner, or at all. Our internal development teams may also be
unable to keep pace with new technological developments that affect the marketplace for our services. In addition, as we
offer new services and functionality, we will need to ensure that any new services and functionality are well integrated
with our current services, particularly as we offer an increasing number of our services as part of bundled suites. To the
extent that any new services offered by us do not interoperate well with our existing services, our ability to market and
sell those new services would be adversely affected and our revenue level and ability to achieve and sustain profitability
might be harmed. Updating technology internally and licensing new technology from third parties may require us to incur
significant additional capital expenditures.
We could experience system failures and capacity constraints which could diminish our ability to effectively provide
our services and could damage our reputation and harm our operating results.
The availability of our services depends on the continuing operation of our information technology and
communications systems. Any damage to or failure of our systems could result in interruptions in our service, which
could reduce our revenues and profits, and damage our brand. Our systems are vulnerable to damage or interruption from
earthquakes, terrorist attacks, floods, fires, power loss, telecommunications failures, computer viruses, computer denial of
service attacks or other attempts to harm our systems. Some of our data centers are located in areas with a high risk of
major earthquakes. Our data centers are also subject to break-ins, sabotage and intentional acts of vandalism, and to
potential disruptions if the operators of these facilities have financial difficulties. Some of our systems are not fully
redundant, and our disaster recovery planning cannot account for all eventualities. The occurrence of a natural disaster, a
decision to close a facility without adequate notice or other unanticipated problems at our data centers could result in
lengthy interruptions in our service.
Our systems face security risks, and any compromise of the security of these systems could disrupt our business,
damage our reputation and result in the disclosure of confidential information, liability for damages and loss of
customers.
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our
proprietary business information and that of our customers, suppliers and business partners, and personally identifiable
information of our customers and employees. We have previously been the target of attempted attacks and must monitor
and develop our systems to protect our and our customer’s data from misappropriation. Our ability to securely process
and maintain this information is critical to our business. Despite our security measures, our systems may be vulnerable to
unauthorized access by hackers or others, computer viruses and other disruptive problems. Someone who is able to
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