TeleNav 2010 Annual Report Download - page 27

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We have experienced rapid growth in recent periods. If we fail to manage our growth effectively, our financial
performance may suffer.
We have substantially expanded our overall business, end user base, headcount and operations in recent
periods. We increased our total number of full time employees from 332 at June 30, 2007 to 897 at June 30,
2010. During this same period, we made substantial investments in our information systems and significantly
expanded our operations outside the United States, including an expansion of our research and development
activities in China. For example, we added 146 new employees in China during fiscal 2010. Our expansion has
placed, and our expected future growth will continue to place, a significant strain on our managerial,
administrative, operational, financial and other resources. If we are unable to manage our growth successfully,
our operating results will suffer.
Network failures, disruptions or capacity constraints in our third party data center facilities or in our servers
could affect the performance of our LBS and harm our reputation and our revenue.
Our LBS are provided through a combination of our servers, which we house at third party data centers, and
the networks of our wireless carrier partners. Our operations rely to a significant degree on the efficient and
uninterrupted operation of the third party data centers we use. Our hosted data centers are currently located in
third party facilities located in the San Francisco Bay Area. We have recently added third party data center
facilities in the Sacramento, California area to provide for disaster recovery and, which we expect, in the long
term, to accommodate the anticipated growth of our LBS. Depending on the growth rate in the number of our end
users and their usage of our services, if we do not timely complete and open additional data centers, we may
experience capacity issues, which could lead to service failures and disruptions. In addition, if we are unable to
secure data center space with appropriate power, cooling and bandwidth capacity, we may be unable to
efficiently and effectively scale our business to manage the addition of new wireless carrier partners, increases in
the number of our end users or increases in data traffic.
Our data centers are potentially vulnerable to damage or interruption from a variety of sources including
fire, flood, earthquake, power loss, telecommunications or computer systems failure, human error, terrorist acts
or other events. We have not yet completed a comprehensive business continuity plan and there can be no
assurance that the measures implemented by us to date, or measures implemented by us in the future, to manage
risks related to network failures or disruptions in our data centers will be adequate, or that the redundancies built
into our servers will work as planned in the event of network failures or other disruptions. In particular, if we
experienced damage or interruptions to our data centers in the San Francisco Bay Area, or were unable to
commence recovery operations in our new data center in Sacramento, California, our ability to provide efficient
and uninterrupted operation of our services would be significantly impaired.
We could also experience failures of our data centers or interruptions of our services, or other problems in
connection with our operations, as a result of:
• damage to or failure of our computer software or hardware or our connections and outsourced service
arrangements with third parties;
• errors in the processing of data by our servers;
• computer viruses or software defects;
• physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events; or
• errors by our employees or third party service providers.
Poor performance in or disruptions of our services could harm our reputation, delay market acceptance of
our services and subject us to liabilities. Our wireless carrier agreements require us to meet at least 99.9%
operational uptime requirements, excluding scheduled maintenance periods, or be subjected to penalties. For
example, in August 2009 we experienced a four hour interruption of service, although no penalties were applied.
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