TeleNav 2012 Annual Report Download - page 28

Table of Contents
Our success depends on significantly increasing the number of end users for our services and products through distribution with our wireless
carrier customers, automotive manufacturer and OEM customers and through application stores.
Our future success depends on achieving widespread deployment of our navigation services and products through wireless carrier customers,
automotive manufacturers and OEMs and through application stores. We have seen declines in the number of paid monthly recurring fee end users
we acquire through our wireless carrier customers. As a result, we expect that our revenue from wireless carrier customers will decline substantially
and that the composition of the remaining wireless carrier revenue will change over the near term. In light of this trend away from paid navigation
and toward freemium offerings, we will be required to increase the number of vehicles in which our navigation solutions are offered and the number
of car buyers that purchase those solutions, as well as successfully convert an increasing number of our subscribers who are not paying for our
services to our premium paid offerings and generate revenue by selling advertising that those subscribers see in our free and paid products. We do not
have significant experience in sourcing and selling mobile advertising and may not be successful in doing so. However, we believe that to achieve
higher returns on mobile advertising, we need to be able to offer advertisers a larger pool of mobile users. Our ability to generate revenue from our
navigation services will depend on broad distribution and the quality of those services and subscriber demand for those services, which may vary by
market. Attempts to generate revenue from paid premium services or advertising may not be successful and our business, operating results and
financial condition could be adversely affected.
Our ability to increase or maintain our end user base and revenue will be impaired if mobile phone manufacturers do not allow us to customize
our services for their new devices.
We typically deliver our services through client software that has been customized to work with a given mobile phone’s operating system,
features and form factors. Wireless carrier customers often insist that mobile phone manufacturers permit us to customize our client software for their
devices in order to provide the end user with a positive experience. Wireless carriers or mobile phone manufacturers may enter into agreements with
other providers of mobile location services for new or popular mobile phones. For this reason or others, some mobile phone manufacturers may
refuse to permit us to access preproduction models of their mobile phones or the mobile phone manufacturers may offer a competing service. If
mobile phone manufacturers do not permit us to customize our client software and preload it on their devices, we may have difficulty attracting end
users because of poor user experiences or an inconvenient provisioning process. If we are unable to provide seamless provisioning or end users
cancel their subscriptions to our services because they have poor experiences, our revenue may be harmed.
We are substantially dependent on revenue from our mobile navigation service and, if we fail to generate significant revenue from other services,
our operating results may be harmed when revenue from our mobile navigation service declines.
Although revenue in absolute dollars from sources other than mobile navigation rose in all periods presented, revenue from our mobile
navigation service declined from 93% of our revenue in fiscal 2011 to 84% and 57% of our revenue in fiscal 2012 and 2013 , respectively. Although
some of our other sources of revenue such as automotive navigation and advertising are growing, in the near term we anticipate that we will not be
able to replace the revenue previously generated from Sprint in the short-term. We have experienced a reduction of revenue from mobile navigation,
partially as a result of increased competition from free and other low cost offerings and from the renegotiation of agreements with our wireless carrier
customers. In addition, certain of our wireless carriers have experienced a reduction in the number of navigation subscribers, who have moved to
freemium or free offerings. If subscriptions for our navigation services at our remaining wireless carrier customers were to decline more rapidly than
we expect, our revenue would be substantially harmed. Any increase in our revenue from our automotive navigation, mobile advertising and
premium navigation services will likely not be sufficient to replace our declining wireless carrier revenue in the short-term, if at all. If we were
unable to offset declining revenue from mobile navigation by increasing the amount of revenue that our other services and products represent, our
business, operating results and financial condition would be harmed.
We rely on our customers for timely and accurate subscriber and vehicle sales information. A failure or disruption in the provisioning of this data
to us would materially and adversely affect our ability to manage our business effectively.
We rely on our wireless carrier customers to bill subscribers and collect monthly fees for our mobile navigation services, either directly or
through third party service providers. In addition, we rely on our automotive and OEM customers to provide us with reports on the number of
vehicles they sell with our on-board navigation services included and to remit royalties for those sales to us. If our customers or their third party
service providers provide us with inaccurate data or experience errors or outages in their own billing and provisioning systems when performing
these services, our revenue may be less than anticipated or may be subject to adjustment with the customer. In the past, we have experienced errors in
wireless carrier reporting. If we are unable to identify and resolve discrepancies in a timely manner, our revenue may vary more than anticipated
from period to period and this could harm our business, operating results and financial condition.
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