QUESTION AND ANSWER PERIOD following the remarks by Rob Armstrong, CEO of

Note that questions, some unintelligible on the recording, are paraphrased.  The questioner is identified if known (That means if I recognized the voice).  Transcribed by Dick Cleaveland

Theresa Reed: Is it possible to make this product available directly from the company instead of have it marketed in retail stores?  Perhaps at a higher price than you have recently.

Armstrong: We have thought about that; we have entertained that model; there are actually a lot of different models that we looked at. We looked at a model called open source which some of you may be familiar with. The problem is - I know that this is not an answer that a lot of you want to hear - but we are a business, we do have to make a profit. Now the way that we make a profit is by serving a broad base of customers, meeting their needs, making sure that they are happy and content with the products and services that we provide. One of the challenges that weíve had, I think some of you know, at one time we had six genealogy applications that we owned as a company through all of the various mergers, acquisitions with Broderbund, Mattell, The Learning Company, all of that, Parsons got thrown in there, we had a lot of companies. The problem is that to the extent that we try to do all of that, you cannot do any of them well, and we had to bring ourselves to a point where we said ďin order to serve the broadest needs of our customer base weíve got to focus ourselves.Ē

Now, to the point that you made, to the possibility of selling the product direct, I do not believe v- and we looked at it from a modeling standpoint - I do not believe that the product would be profitable at that level.  The volume that weíll derive will not justify it.  The reality is there ARE competitive pressures out there.  The fact of the matter is that if I start to charge say - for sake of argument - $250, people are going to buy TMG anyway. Theyíre going to sit down and say ďheís at $99 and why do I want to pay $250 for something when I can get a very good product for $99?Ē  The reality is that there are people out there who say ďI can get Family Tree Maker, I can get Generations, I can get Family Origins...Ē (they work in different ways, but a lot of time people buying software donít necessarily understand that) ď...I can get them for $49, $29, I can get really good prices on those.Ē  A lot of those competitive pressures make it very difficult for us to charge what the product is probably really worth, and for that reason I donít believe the product can be sold profitably on a direct basis.

The other thing which I will say and did not comment on in my remarks is that the code base at this point of time is really in a difficult position.  Thatís the thing that makes the open source model very, very difficult.  First of all you have to find people who will program in FoxPro. You know, the only thing more boring than listening to business talk is listening to programming talk.  Iím here to tell you that if you sit down with a programmer today, and say to that programmer ďI want you to go spend time developing 16-bit FoxPro code...Ē - you canít get people to do it. They want to write in Java, they want to be involved in internet stuff. Theyíre thinking about their career, theyíre thinking about five, ten years from now, and they look at that opportunity as taking them backwards. So itís very, very hard to get people to do it.  What weíve found on the 3.0 upgrade was that if you implement three things you break twenty. Because the code base is in just that kind of shape. It really is, and in that regard Iím just not confident that an open source kind of model can potentially overwhelm us in terms of user support needed in order to support an open source model.

Unknown questioner: If we stay with UFT then in a couple of years other programs will have advanced and UFT will not be doing the job any more.

Armstrong: That is true, and Iíll say a couple of things about that and itíll be kind of funny coming from me, but I do say to Family Tree Maker users when we do an upgrade Iím very frank with them: Look at the features - is it something that youíre going to benefit from?  If itís something youíre going to use, then great - [but] if youíre not going to use it then skip the upgrade. ... My advice would be to step back and say ďwhat is it that Iím not doing today that I wish I could do in this product?Ē If there are really significant things that you are not doing today that you really want to be able to do, then I think you gotta find a product that will do those things and you ought to make the migration. If you say to yourself ďYíknow, Iím pretty much getting what I need right nowĒ then I think youíre in a position to make a more studied decision. Iím going to be very honest with you - all of you eventually are going to migrate out of UFT. I donít know if itís a year from now, I donít know if itís five years from now, I donít know if itís ten years from now, youíre going to do it. The question is, how fast do you have to do that? What is it youíre not being able to do today? Iíve done a lot of software personally; very often I buy software packages for a feature that I never use. I bought a video capture card to do some film editing, but maybe in my next lifetime Iíll get around to it, I just donít have the time to do it.

Dick Cleaveland: My perception is that 3.1 was brought out because you believed it would be a bug fix and it turns out there are a lot of bugs that were not fixed in 3.1.  Is there ANY chance that you can go through one more cycle and bring out a 3.2 that does fix those bugs?

Armstrong: Well, the first comment Iíll make is that bugs in the software industry are a difficult thing. I will make the statement that there is virtually no software package today on the market that doesnít have significant bugs in it. There certainly are bugs - I could produce you a very attractive list of bugs in Family Tree Maker, for example. We know what a lot of the bugs are; we try to fix those bugs when we have the opportunity to do it. Our historical model - which is different than Palladiumís model - Palladium kept programmers on staff and all they did was fix bugs and then they would routinely release these bugs.  We, as a company, have always incorporated bug fixes into upgrade releases, so we try to put it in release of an upgrade, we try to put incremental functionality but we also try to put bug fixes; thatís what we [unintelligible]. We look at bugs in the context of first of all - there are sort of two different levels of bugs. One level of bugs is the kind that addresses or attacks the integrity of the underlying data that you have and weíll fix that. Weíre gonna fix that, weíre not going to leave a product out there with people having the possibility of opening a file and losing their data.  So we will fix that.  If we were to come to the knowledge of one which we do not have today, we would release a 3.2.  The other type of bug is the type of bug where you have some type of functionality that either has problems with it, usually under certain circumstances, that you would like to be able to fix.  And one of the things you would have to do as a software developer is sit down and say ďhow frequently does this occur, does it occur so frequently that we need to spend the time and resources to get it fixed right away, is this affecting a very small group of users at this point of time, is there a work-around for it?Ē -  but if itís affecting a small group of users without a work-around, then normally you schedule those things after.  It is not our intention at this point in time to address those types of bugs.

Dick Cleaveland: The reason I asked that question is that it couples with the idea that youíre not planning on doing any further development of UFT which means that, from my standpoint of trying to help our users - our members - Iíd like to have them know what bugs do exist so that they know what work-arounds are; know that when they get a result that is not right, that itís not their fault, that itís UFT. Iím aware that you have, in your documentation, good information on the existing outstanding bugs over and above those which Iíve managed to collect.  Could you make that publicly available to us so we can help our members understand the limitations of the current UFT?

Armstrong: Itís not something I have considered; Iím willing to consider it.

Dick Cleaveland: Would you please?

Armstrong: I will. You can call me and we can talk....  I donít know what the ramifications of it are; we certainly expect and intend to continue to support the problems so that when someone does encounter a problem and who does call us will be able to get support in terms of working their way through it.  The one problem that occurs to me about that kind of approach is that very often bugs are complex; the circumstances that lead to a bug manifesting itself could be quite complex. And what we wouldnít want to do is have people thinking that they may be subject to a bug which theyíre really not, because theyíre not satisfying all the criteria that lead to it.

Dick Cleaveland: Our approach has been if our members know about the existence of a bug and they get a crazy result, they donít call you because they know itís there; and if they donít know itís there theyíll be bothering your technical support people, and so it ought to be to your advantage to let us know what you have in the data base.

Armstrong: Thatís fair, I will consider that.

Unknown questioner: Why would you consider supporting a product for which there is no revenue stream?

Armstrong: We would consider supporting a product for which there is no revenue stream because we feel that thatís the right thing to do. And the overall cost for us to do it - itís the right thing to do.

Unknown questioner: It would seem to be the cheaper way to do it would be to set up a web page [unintelligible]

Armstrong: It might be a cheaper way to do it; I have no intention of doing that. My experience is, which I stated earlier, is that most bugs that manifest themselves manifest themselves through a relatively complex trail of transactions, and for a lot of people who are not as technologically sophisticated it can be very hard to narrow that down.  And thatís why Iím not aware of any software company thatís gone to - completely away from tech support ....

Unknown questioner: If youíre a Family Tree Maker user and you call up Family Tree Maker support, do you get the same people that Ultimate Family Tree gets, or ....

Armstrong: Thatís a very good question. The way itís structured today we have Ultimate Family Tree experts, but everybody will take a phone call, because weíd rather you not sit on hold to find out what your problem is. ...  Iíll never forget when we did a release of Family Tree Maker and we were all waiting to see what the very first technical support call that we got would be. The very first technical support call we got was the person was trying to install with the CD upside down.  Thatís part of the game, and we know that, but thatís why you donít want someone sitting on hold; youíve got to figure out what the level of problem is.

Unknown questioner: The other side of the problem is that when we call up and they say what program are you using and we say UFT and they say we donít help you and hang up.

Armstrong: Weíre now at a point where I hope... [Disjointed discussion, much interruption] There are things that you do from a technical support end to keep people trained and to make sure that theyíre motivated and knowing the product. But I get your point.

Unknown questioner: The point is that most of the users have gotten to a certain degree of tolerance or satisfaction; itís the new users who generate the volume of calls.

Armstrong: Again, at this point in time Mattel continues to sell the product at retail.

Unknown questioner: Are they going to manufacture or are they just going to sell what theyíve got?

Armstrong: Thatís their decision; I donít make that decision.

Unknown questioner: But itís not available at retail.

Armstrong: It is in some places.

Unknown questioner: Iíve asked for it at CompUSA, at Micro Center, they donít have it.

Theresa Reed: Do you have it? Can we order it from you?

Armstrong: Yes, we still have it. We have it available on the web site, I believe.

Unknown questioner: You know you have a very highly trained user base for this program, and weíre very sorry to see it go.

[Dead period due to tape swap]

Unknown questioner: Are you going to put UFT features into Family Tree Maker so that it gets to be a better product?

Armstrong: There are some things that we have put in and some things that weíre looking to put in. I did have the chief architect from Palladium spend some time doing analysis there. Itís very difficult because the fact of the matter is, which you all know, theyíre very different in terms of how they approach genealogy.

Unknown questioner: We shouldnít be foisting Family Tree Maker on people... Unknown: on anybody.

Armstrong: What we want to do is to offer people products and let people make their own decisions.

Unknown questioner: Iím confused about what company you, uh...

Armstrong: We are, we are privately owned, separate entity from Mattel, Mattel is an investor of ours, A&E Television Networks is an investor of ours as is Hearst, as is a couple of venture funds Thomas Lee and Western Presidio.

Bob Naylor: ...the people keep calling us up asking us if weíd like to upgrade to Family Tree Maker.  I donít want to downgrade.

Armstrong: I will make the statement to all of you, I can stare you in the eyes on this, that we have never done that.

[many rejoinders]

Armstrong: I have never done that.

Unknown questioner: I got a call from to renew my subscription to, and at the same time he said we would like to give you an introductory offer to upgrade to Family Tree Maker, and I said ďdo you mean downgrade?

Armstrong: I am very confident that the employee you were talking to was a Mattel employee. I know that, because for a long time they were doing the sales and support and of course they were using our name in that context. The other thing.... to be very honest with you, we got lists from Mattel when we came out of Mattel.  A lot of those lists were not well organized, were not sorted correctly, so that there are people on UFT lists that have Family Tree Maker and there are people on Family Tree Maker that have UFT.  We have never initiated a campaign, we have never instructed an employee to offer to an Ultimate Family Tree customer Family Tree Maker.  If you want to bring it up, we will make that offer. [Theresa Reed: No way] I know, because our ... is not to insult customers; itís not good business-wise.

Unknown questioner: ... is there a migration path.... [unintelligible].

Armstrong: Thatís a great question - this is a comment that a lot of you hate for me to make, but we do not announce products before we are ready to release them - but that is not the right question to ask. The real question that you have to ask yourself is do you really believe that eight years from now, ten years from now, youíre going to be sitting in front of a computer ... using TMG - I donít know - TMG version 35 - and doing your genealogy. Do you really believe that? Or do you believe that instead youíll be going into an on-line environment with very rich on line repositories with a lot of people sharing data back and forth through that environment. [various comments about reliability of data, all at once].   There are different visions about where on-line is going, and....

Unknown questioner: We never thought twenty years ago that it would turn into what it has, either.  Weíve been with this product for twenty years, and thatís a long time.

Armstrong: It is, and twenty years ago nobody had a clue that the internet was going to be like it is; FIVE years ago nobody had a clue that the internet was going to be what it is. Iíll tell you this, on a personal level, I needed a part for my grill the other day, because I have a gas grill and was having problems with part of the mechanism. The first place I went to was the internet.  And .... I have a six year old daughter and I was sitting there thinking my six year old daughter is never going to go through elementary school or high school without having access to the internet.  The world is a changing place, and your question was a very good question; thatís the direction that I believe that weíre really going to go.  There are a lot of really cool things about Ultimate Family Tree in terms of itís ability to document events, document participants in events, and a lot of people would like to be able to have visibility to the events that you spend your time [unintelligible] and I believe that the internet will provide that visibility.

Bob Naylor: Let me comment. I make my living working at the National Genealogical Society in the Education Department. UFT is one of two programs that come up to our standards; we hate it and cringe when people send it in Family Tree Maker because we know itís going to be wrong in the documentation, and right off the start we have to send it back to them to regroup.  And the other thing weíre fighting now is people say ďI got it off the internet.Ē  ďHave you verified anywhere?Ē ďI got it off the internet.Ē

Armstrong: I know, there are high school teachers that are dealing with students handing in papers ...[everyone speaking at once] Everyone has to struggle with this, I see this because I also have a 13 year old son, and you know when he has a report to do the first place he wants to go now is not to an encyclopedia - not even to the encyclopedia Britannica On Line - he want to go to [?] or Yahoo and do a search and follow the links and see what turns up.  Itís going to be an education process across all of society about the quality of information you find on the internet.

Theresa Reed: Have you considered selling this to someone whoís willing to develop it?

Armstrong: I worked for GE for a long time. Jack Welshís favorite statement is ďeverythingís for sale at the right price.Ē  I will certainly consider an offer. I will tell you this: anybody who makes me an offer Iím gonna start in the eyes and say ďyou realize that youíll never make money on this product.Ē  Because itís just not there. Itís not there. The amount of work that it would take to deal with the - by the way, in case you havenít heard, Microsoft is moving support away from FoxPro, so the underlying support engine that today underlies Ultimate Family Tree is no longer going to be supported by Microsoft. [unintelligible interruption: 32 bit] Well I know 16 bit, do you know about 32 bit? [I think itís all FoxPro] I think what theyíve said so far is all FoxPro; theyíve been ambiguous about Visual FoxPro. But there are a lot of people who like to step back and say they can see what was coming with ultimate Family Tree; it doesnít take a rocket scientist to step back and look at whatís going on with FoxPro, Visual FoxPro and Access, which is clearly Microsoftís favorite database product and say ďletís go in the direction that theyíre going.Ē

Theresa Reed: Whatís Blue doing these days; Blue could fix those bugs in a minute, heís so familiar with this program.

Armstrong: Blueís working on other things; heís primarily right now [?] working in our online development environment; heís still with the company; still working for us. Itís a really difficult thing for software developers, and I commented on this earlier so Iíll give you the short version of it. Software developers these days want skills which are generally translatable in terms of the marketplace, and that means they want experience with Java, in those kinds of [?] development environments, NOT experience with something like 16-bit FoxPro.

Paul Barton: In regard to the confusion about who you are, your official letter arrived from the Broderbund Software Company, Banner Blue Division, yesterday.

Armstrong: You ought to see my business card; itís even a bigger mess. We are in the process of straining a bunch of that stuff out. Someone probably  had an old envelope and just said I goota get this out so they, uh...

I just want to say thank you, I do thank you all for being customers, I do value you, I appreciate you and I wish we were meeting under better circumstances, I do hope and do believe that our ... support for the product will improve now that we have our own dedicated people on line. Thank you.