America Online 2011 Annual Report Download - page 22

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Table of Contents
compatible with such devices. We may also need to secure arrangements with device manufacturers and wireless carriers in order to have placement on these
devices. Even if we can secure placement of our products and services on these devices, our ability to generate revenues depends upon our ability to negotiate
favorable payment terms. As consumer pricing with the carriers changes, AOL's ability to negotiate favorable payment terms and its ability to earn revenues
may be adversely impacted. We must also ensure that our licensing arrangements with third-party content providers allow us to make this content available on
these devices. These factors are also important with respect to AOL's ability to sell applications to consumers via alternative devices, and thus to generate
revenues other than subscription or advertising revenues.
Currently we offer applications directly to consumers for download from AOL Properties, the Apple App Store, or through other distribution channels.
We also offer certain applications, and access to their content, products and services by means of agreements with wireless carriers and device manufacturers.
To the extent that consumers are using our applications, content, products and services, we have opportunities to generate advertising revenues. However, the
amount of revenues, including advertising revenues, earned from such arrangements is currently small. Also, business models in the marketplace seem to be
undergoing experimentation and rapid change. To the extent that we cannot generate consumer awareness and adoption of our applications, content, products
and services available on mobile devices, and cannot develop means of generating advertising revenues from consumer usage, our business could be adversely
impacted.
We rely on legacy technology infrastructure and a failure to update or replace this technology infrastructure could adversely affect our business.
Significant portions of our content, products and services are dependent on technology infrastructure that was developed a number of years ago. In
addition, we incur significant costs operating our business with multiple and often contradictory technology platforms and infrastructure. Updating and
replacing our technology infrastructure may be challenging to implement and manage, may take time to test and deploy, may cause us to incur substantial
costs and may cause us to suffer data loss or delays or interruptions in service. These delays or interruptions in service may cause our consumers, advertisers
and publishers to become dissatisfied with our offerings and could adversely affect our business.
Our dependence on legacy technology infrastructure may also put us in a weaker position relative to a number of our key web services competitors.
Competitors with newer technology infrastructure may have greater flexibility and be in a position to respond more quickly than us to new opportunities,
which could impact our competitive position in certain markets and adversely affect our business.
In addition, as the skills needed to maintain and repair our legacy technology infrastructure remain scarce, this may adversely impact our ability to
effectively manage our legacy infrastructure.
If we are unable to hire, engage and retain key management and other personnel, our business could be adversely affected.
Our future success depends in large part upon the continued service of key members of our management team. In particular, Tim Armstrong, our CEO,
is critical to AOL's overall management, as well as the development of AOL's strategic direction and culture. We do not maintain any key-person life
insurance policies.
We are also dependent on our ability to hire, engage and retain talented, highly-skilled employees, including employees with specific areas of expertise
such as content creation. Accomplishing this may be difficult due to many factors, including fluctuations in global economic and industry conditions, frequent
changes in our management and leadership and the attractiveness of our compensation programs relative to those of our competitors. If we do not succeed in
retaining and engaging our key employees and in attracting new key personnel, including personnel with specific areas of expertise, we may be unable to meet
our strategic objectives and, as a result, our business could be adversely affected.
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