TeleNav 2013 Annual Report Download - page 30

Table of Contents
We also use our proprietary provisioning and reporting system to record and report royalties we owe to third party providers of content used by
end users in connection with our services. Certain of the third party content providers have the right to audit our use of their services and, if we were
found to have under or incorrectly reported usage, we may be required to pay the third party content providers for the actual usage, as well as interest
and the cost of the audit. Any significant error in our recording and payment of royalties to our third party content providers could have a material
and adverse effect on our financial results and profitability. We may also incur losses as a result of any significant error.
Network failures, disruptions or capacity constraints in our third party data center facilities or in our servers or other cloud servers could affect
the performance of our navigation services and harm our reputation and our revenue.
Our navigation services are provided through a combination of our servers, which we house at third party data centers, the public Internet and
the private and wireless networks of our wireless carrier customers. 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 and the Sacramento, California area and we use a cloud provider for our advertising network services. 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 customers,
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:
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.
In addition, if our end user base continues to grow, additional strain will be placed on our technology systems and networks, which may
increase the risk of a network disruption. Any outage in a network or system, or other unanticipated problem that leads to an interruption or
disruption of our navigation services, could have a material adverse effect on our operating results and financial condition.
We may not be able to enhance our navigation services to keep pace with technological and market developments, or develop new navigation
services in a timely manner or at competitive prices.
The market for location services is characterized by rapid technological change, evolving industry standards, frequent new product
introductions and short product life cycles. To keep pace with technological developments, satisfy increasing customer requirements and achieve
product acceptance, our future success depends upon our ability to enhance our current navigation services platform and to continue to develop and
introduce new navigation service and product offerings and enhanced performance features and functionality on a timely basis at competitive prices.
Our inability, for technological or other reasons, to enhance, develop, introduce or deliver compelling navigation services and products in a timely
manner, or at all, in response to changing market conditions, technologies or consumer expectations could have a material adverse effect on our
operating results or could result in our navigation services becoming obsolete. Our ability to compete successfully will depend in large measure on
our ability to maintain a technically skilled development and engineering team and to adapt to technological
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damage to or failure of our computer software or hardware or our connections and outsourced service arrangements with third parties;
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errors in the processing of data by our servers;
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computer viruses or software defects;
• physical or electronic break-
ins, sabotage, intentional acts of vandalism and similar events; or
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errors by our employees or third party service providers.