This excerpt taken from the SOHU 10-Q filed Aug 8, 2005.
Our failure to keep up with rapid technology changes may severely affects our future success.
The Internet industry undergoes rapid technological changes. Our future success will depend on our ability to respond to rapidly evolving technologies, adapt our services to changing industry standards and improve the performance and reliability of our services. If we fail to adapt to such changes, our business may be adversely affected. For example, with the development of 2.5G and even 3G technology, the focus of wireless applications has been transferred from text message services to multi-media messaging services, wireless games, wireless downloads and other applications. We need to adapt to and support these services to be successful. If we fail to do so, we may lose our market share and our profitability may suffer. In addition, the online game industry is also evolving rapidly. We need to anticipate new technologies and games and evaluate their possible market acceptance. We may be unable to recover our game development costs and our growth may be adversely affected if new technologies render our online games less attractive to users.