TeleNav 2013 Annual Report Download - page 15

Table of Contents
of our existing services to new mobile phones. Our research and development expenses were $52.6 million , $65.8 million and $60.3 million for
fiscal 2011, 2012 and 2013, respectively. We expect that the absolute dollar amount of our research and development expenses will not change
materially in fiscal 2014.
Marketing and sales
Navigation Services
We rely on the extensive distribution channels of our wireless carrier customers to expand the adoption of our navigation services. In addition,
we distribute our navigation services to end users through mobile phone application stores, such as Apple's App Store and Google's Google Play. We
focus the majority of our marketing efforts on app store optimization, search engine optimization, app store marketing, and supporting our wireless
carrier customers' marketing programs to promote our navigation services to their subscribers through either our wireless carrier customers' white
label or our own branded version of our solution. This strategy enables us to leverage the marketing resources of our wireless carrier customers and
reduce our sales and marketing costs.
Marketing . Our wireless carrier customers are our primary source of marketing to end users for our white label mobile navigation services.
They employ a variety of marketing programs to sell our navigation services, including promotion in retail stores and through their sales forces, and
through various media and Internet advertising. We also implement selected public relations activities to support the launch of our navigation
services on new devices or the release of new navigation services.
In addition, we focus certain marketing efforts for our services on distribution in the iPhone and Android application marketplaces. These
efforts are focused on building our direct relationship with consumers and the Scout brand specifically. We also enable developers of location based
websites and applications to provide personalized navigation for their products through our Scout for Apps developer service.
Sales . Our wireless carrier customers are primarily responsible for obtaining our end users through their sales and marketing efforts to their
existing and potential subscribers. For example, mobile phones enabled with our navigation services are sold in AT&T's direct channels, such as
retail stores, and through the AT&T website and indirect channels, such as national retail partners and indirect dealers.
In connection with sales efforts directed at automobile manufacturers and OEMs, we have a sales team that focuses on targeted customers and
responds to requests for proposal and related sales opportunities.
Advertising Network Services
We market our advertising services based upon our location expertise. We are building brand recognition and customer relationships based
upon a consultative relationship with key advertising buyers, primarily advertising agencies. Given the mobile advertising marketplace is still in its
infancy, we believe that we have an opportunity to influence the way buyers understand the advertising opportunity. We are highly engaged in direct
sales efforts to expand the reach of our mobile advertising solutions. As of June 30, 2013, our advertising sales team included eight employees
focused on growing direct relationships with large agencies and brands. We anticipate increasing our advertising sales headcount significantly during
fiscal 2014; however, individual sales representatives typically take three to six months to become fully productive in selling our products.
Customers
We derive revenue from wireless carriers and end users, automobile manufacturers and OEMs, and advertising and advertising network
services. We primarily derive our revenue from automobile manufacturers and OEMs whose vehicles contain our proprietary software and are able to
access our navigation services. We also derive revenue from our partnerships with wireless carriers who sell our navigation services to their
subscribers either as a standalone service or in a bundle with other data or voice services. We currently provide our navigation services to customers
in North America, Asia, Europe and South America. End users may also subscribe to our navigation services from our application stores, but these
customers represent a small minority of our end users.
We generate revenue from automobile manufacturers and OEMs for delivery of customized software and royalties from the distribution of this
customized software for on-board and connected auto based navigation solutions. We typically enter into long term supply arrangements with our
auto customers to provide our solutions across multiple car models in multiple regions around the world.
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