S-Curve: Rosetta Stone, Ltd.
Running Header: S-Curve: Rosetta Stone, Ltd.
S-Curve: Rosetta Stone, Ltd.
Regina Wright
Ed.S Educational Technology
Regina.wright@waldenu.edu
Diffusions and Innovations of Technology
Summer 2009
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S-Curve: Rosetta Stone, Ltd.
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Rosetta Stone is a product that is produced for individuals, schools, the government, and
the military (direct sales). In the S-Curve, these groups are combined to form a social system.
The vertical axis expresses the revenue acquired by total direct sales to this social system. Each
adoption in the social system is in a sense equivalent to a learning trial by an individual (in fact,
if the individual tries the innovation prior to adoption, each adoption is indeed a learning trial).
(Rogers, 2003, pp. 272,273)
The horizontal axis displays the years that Rosetta Stone was first founded and
introduced to the public, through the current year. It is here that the rate of adoption can be
clearly seen in forming the s-shape. The data in this rate of adoption reflects the growth in
revenue from 1992 to the current year, 2009. Due to lack of record of earning amounts for the
early period under the ownership of Fairfield Language Technologies, an estimation of $5
million as starter revenue was used.
In 2003, when management and ownership changed, the
new ownership acquired the revenue of $15.5 million. In 2004, that revenue increased to $25.4
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S-Curve: Rosetta Stone, Ltd.
million. The next reported increase was in 2007, with revenue at $137.3 million. In 2008, the
revenue was reported at $209.4 million. This is when it was decided to pursue making Rosetta
Stone, Ltd. an Initial Public Offering (IPO). (Initial Public Offering of stock, government
archieves, 2009) Given the economic status of the United States at this point in time, the
learning of new languages offers marketability to prospective job applicants. The S-shaped
adopter distribution rises slowly at first, when there are only a few adopters in each time period.
The curve then accelerates to a maximum until half of the individuals in the system have
adopted. (Rogers, 2003, p. 272)
In 2003, new President/CEO Tom Adams, with his experience in international business
led Rosetta Stone to expand globally to areas like London, and Tokyo. “Millions of learners in
more than 150 countries have already used our software to gain the confidence that comes with
truly knowing a new language. We’re continually improving our software technology and adding
new products.” (Rosetta Stone Software, 2009) According to Rogers, (2003, p. 274), after the
heart of the diffusion process, it is often impossible to stop the further diffusion of a new idea,
even if one wished to do so.
In 2006, the company name was changed to Rosetta Stone, Ltd. (Rosetta Stone Software,
2009) It was next sold to two investment firms, ABS Capital Partners, and Northwest Equity
Partners. On September 23, 2008 it filed an Initial Public Offering (IPO) with the Securities and
Exchange Commission. (Rosetta Stone Software, 2009) On April 15, 2009, Rosetta Stone raised
$112 million in its IPO of stock with shares valued at $18. The stock closed at $25.12 per share.
(Rosetta Stone Software, 2009)
Revenue grew from the $15.5 million in 2003 (as Fairfield Language Technologies) to
$137.3 million in 2007, representing a 73% compound annual growth rate. (Rosetta Stone
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S-Curve: Rosetta Stone, Ltd.
Software, 2009) Approximately 85% of revenue in 2007 was generated through direct sales.
(Rosetta Stone Software, 2009) This innovation proved to follow the s-curve of adopter
distributions.
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S-Curve: Rosetta Stone, Ltd.
References:
Fairfield Language Technologies, Creator of Rosetta Stone(R) Language-Learning Software, Completes
Management Buyout. (2006, January 6). Retrieved July 10, 2009, from NewsBlaze:
http://newsblaze.com/story/2006010611260200001.mwir/topstory.html
Fairfield Language Technologies, Creator of Rosetta Stone(R) Language-Learning Software, Completes
Management Buyout. (2006, January 6). Retrieved July 10, 2009, from NewsBlaze:
http://newsblaze.com/story/2006010611260200001.mwir/topstory.html
Initial Public Offering of stock, government archieves. (2009, July 8). Retrieved July 9, 2009, from
Wikipedia.org: www.sec.gov/Archives/edgar/data/1351285/000104746908010224/a2187940zs1.htm
Lazo, A. (2009, May 11). On Wall Street, Rosetta Stone Tries New Lingua Franca. Retrieved May 15, 2009,
from WashingtonPost.com: http://www.washingtonpost.com/wpdyn/content/article/2009/05/10/AR2009051002063.html?hpid=sec-tech
Rogers, E. M. (2003). Diffusion of Innovations, Fifth edition. New York: Free Press.
Rosetta Stone Software. (2009, July 8). Retrieved July 9, 2009, from Wikipedia:
http://en.wikipedia.org/wiki/Rosetta_Stone_(software)
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