TeleNav 2010 Annual Report Download - page 30

The failure of mobile phone providers selected by our wireless carrier partners to keep pace with technological
and market developments in mobile phone design may negatively affect the demand for our LBS.
Wireless carriers select various mobile phones to run on their wireless networks. Our future success will
depend on these mobile phone providers’ ability to design and manufacture mobile phones that meet the demands
of wireless carriers and their subscribers. In order to continue their relationships with the wireless carriers, these
mobile phone providers will have to continue to invest in developing mobile phones that are compatible with the
advanced network technology that wireless carriers are deploying to increase network capacity and speed. If our
wireless carrier partners fail to select mobile phone providers whose products have superior GPS capabilities or
fail to adopt other advanced technologies, our ability to sell our LBS may suffer. If we do not extend our client
software to these devices in a timely and efficient manner before the initial commercial launch of the mobile
phone, our adoption rates will suffer. In addition, if our wireless carrier partners select mobile phones that are
incompatible with our LBS client software, we will incur additional time and expenses to extend our services to
those devices, which may cause us to incur unanticipated operating expenses and miss product launch windows.
Because of short product life cycles in the wireless communications industry, if we fail to integrate our software
on a mobile phone prior to its commercial launch or if it is preloaded with another provider’s LBS, we may lose a
substantial opportunity to gain end users who purchase that device and our revenue may suffer.
Successful sales of our LBS depend on our wireless carrier partners keeping pace with changing consumer
preferences for mobile phones. If our wireless carrier partners do not select mobile phones with the design
attributes attractive to consumers, such as thin form factors, high resolution screens and desired functionality,
customers may select wireless carriers with whom we do not have a relationship and subscriptions for our LBS
may decline and, consequently, our business may be harmed.
A large percentage of our research and development operations are conducted in China and our ability to
introduce new services and support our existing services cost effectively depends on our ability to manage
those remote development sites successfully.
Our success depends on our ability to enhance our current services and develop new services and products
rapidly and cost effectively. We opened two research and development centers in China, in addition to our
existing facility, for the purpose of conducting more fundamental product development in those locations. We
currently have a majority of our research and development personnel in China. As we do not have substantial
experience managing core product development operations that are remote from our U.S. headquarters, we may
not be able to manage these remote centers successfully. We could incur unexpected costs or delays in product
development that could impair our ability to meet market windows or cause us to forego certain new product
opportunities.
Because our long term success depends on our ability to increase the number of end users located outside of
the United States, our business will be susceptible to risks associated with international operations.
As of June 30, 2010, we had international operations in China, the United Kingdom and Brazil. Our
experience with wireless carriers outside the United States is limited. Although we have entered into agreements
with 14 wireless carriers to provide our LBS in 29 countries and in absolute dollars our revenue from
international operations increased in each of the periods presented, our revenue from the United States
constituted 97%, 96% and 97% of our total revenue for fiscal 2008, 2009 and 2010, respectively. Our limited
experience in operating our business outside the United States increases the risk that our current and future
international expansion efforts may not be successful. In particular, our business model may not be successful in
particular countries or regions outside the United States for reasons that we currently do not anticipate. In
addition, conducting international operations subjects us to risks that we have not generally faced in the United
States. These include:
• fluctuations in currency exchange rates;
• unexpected changes in foreign regulatory requirements;
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