Businessweek

Rosetta Stone Inc. develops, markets, and sells language-learning solutions consisting of software, online services, mobile applications, and audio practice tools primarily under its Rosetta Stone brand. The company offers its self-study language-learning solutions in approximately 30 languages. It has operating locations in the U.S., as well as various international office locations in Asia and Europe. Products and Services The company’s primary products include Rosetta Stone Version 4 TOTALe and Rosetta Stone TOTALe online. Version 4 TOTALe is available as either tangible packaged software or as an online download of perpetual software. Rosetta Stone TOTALe online combines conversational coaching and an online software subscription and is available in a selection of time-based offers (3, 6, and 12 months durations). ReFLEX, a solution designed for English learners who want to improve their listening and speaking skills, is sold as an online subscription in South Korea and Japan. The core Rosetta Stone language-learning solution offered in TOTALe online and Version 4 TOTALe is offered in approximately 30 languages under the Rosetta Stone brand. Each language has approximately five levels and there are four different editions of its product, such as personal, enterprise, classroom, and home school. The company’s solutions include sales and bundles of certain of the following components: Rosetta Course is the self-study interactive language-learning curriculum that is the core component of the Rosetta Stone offering. The course consists of sequences of listening, speaking, reading, and writing interactions designed to teach, reinforce, and test learners through the company’s software program. Rosetta Studio is a series of coach-led practice sessions that align with the curriculum in Rosetta Course. Studio sessions provide learners with the opportunity to practice what they have learned in Rosetta Course, by talking with a native-speaking coach and other learners. Rosetta World is an interactive community of language learners. Rosetta World gives learners the opportunity to play games with other learners in a structured manner that reinforces what they have learned in Rosetta Course and Rosetta Studio. Audio Companion is a series of digital audio files that contain lessons directly aligned to the Rosetta Stone curriculum, allowing users to practice and carry on their immersive experience when they are away from a computer. The lessons on the Audio Companion could be transferred to various audio platforms. TOTALe Companion HD is a learning tool that provides access to Rosetta Course with the exception of the review and writing path steps, for use on tablet devices. TOTALe Companion HD includes the company’s speech recognition technology. TOTALe Companion includes a series of practice lessons, which use images, audio, and the company’s speech recognition technology to help users refine their speaking skills while they are away from their computer. Distribution Channels The company’s global consumer distribution model comprises a mix of its call centers; Websites; network of kiosks; select retail resellers; home shopping networks, such as GS Home Shopping in Korea; and consignment distributors, such as Navarre. Direct to Consumer: Sales generated through either the company’s Websites or call centers. Retailers: The company’s retail relationships include Amazon.com, Barnes & Noble, Best Buy, Books-a-Million, Costco, Groupon, Staples, and others outside of the U.S. Home School: The company promotes interest in this market through advertising in publications focused on home schooling, attending local trade shows, seminars, and direct mailings. Rosetta Stone Kiosks: As of December 31, 2012, the company operated 87 retail kiosks, including 57 full service retail outlets, in airports, malls, and other strategic high-traffic locations in 19 states. It operated 1 kiosk in the United Kingdom, 3 in Japan, and 26 in South Korea. The company’s institutional distribution model is focused on targeted sales activity primarily through a direct sales force in four markets, such as schools, col