Rosetta Stone: Moving To The Cloud

rosetta stoneIn a move to get into the cloud computing market, Rosetta Stone Inc. has acquired Live-mocha for $8.5 million. The two are both language learning companies, but how they present themselves is a little bit different.

Where Rosetta Stone sells CD's in storefronts and airports, Live-mocha language services are offered solely online.

Taking Down Its Competitor?

So is this move just to get in on the cloud cheap hosting market? Or is it something more? You could say that Rosetta Stone is not only taking over its online competitor, but raking in their customers as well.

In a way, it was inevitable. The world is slowly moving away from software-based programs towards mobile applications and online programs that reside in the cloud. It makes sense: why acquire all of this physical software, when it's all hosted in the cloud, accessible from anywhere?

What This Means For Rosetta Stone

Acquiring Livemocha means Rosetta Stone is expanding its customer base. On top of the middle-aged traveler segment they were attracting, now they plan to appeal to the younger crowd who already embraces the cloud and mobile apps. Says Steve Swad, CEO of Rosetta Stone, “The platform is transformational and accelerates my ability to go faster.”

He said his company has been “on a mission for the last 18 months to accelerate our transition from being a language learning company to being a learning company, and from a CD-based company to a cloud-based company. This transaction is foundational in moving faster in that direction.”

How It Will Work

The company plans to continue to offer the CD language courses for 30 different languages, and will add the use of Live-mocha's cloud-based platform to host additional language materials as well as a variety of other topics. Right now, Live-mocha offers its customers free language courses, and gives them the ability to upgrade to their premium package which offers private coaching. Typical pricing for a Rosetta Stone course runs anywhere from $350 to $500.

Rosetta Stone does offer online courses in the cloud, and 99% of their business customers put this cheap hosting cloud service to use. The company is watching cloud and online sales of its products increasing threefold, and the downloadable course they began offering in the fourth quarter of last year is also seeing increased use. However, the majority of consumers continue to purchase their CD courses.

Reaching For The Cloud

Rosetta Stone was already working on their own cheap hosting in the cloud of their service, and it kind of resembled that of Live-mocha's platform. By acquiring the company, Rosetta Stone can easily move to the cloud platform and save significantly on developer costs.

Not only that, but the acquisition “gives us access to a demographic we didn't have access to before…[and allows us to] extend ourselves to a segment of the market that was out of reach of our traditional product portfolio,” according to the CPO at Rosetta Stone, West String-fellow.

The most attractive offering of Live-mocha, something that is becoming increasingly important for every business: social networking. For example, Mr. String-fellow points to an instance where a potential customer spoke a phrase in Spanish into the microphone on his computer during a Live-mocha demo. Minutes later, four people who spoke Spanish in their native language were providing that customer with feedback.

Live-mocha relies on Amazon's AWS cheap hosting cloud platform for content management, giving the company the ability to add and promote new content swiftly to their customers.

Do you use Rosetta Stone, or have you considered it? Would you be more apt to give it a try now that it is moving to a mobile and cloud platform?

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