TeleNav 2010 Annual Report Download - page 16

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upon a multi-tiered fee structure. We obtain map and POI data pursuant to an agreement with Tele Atlas North
America, Inc., or Tele Atlas, dated July 1, 2009, as amended. Our agreement with Tele Atlas has an initial term of five
years (except for off-board applications sold on Apple’s iTunes Store and selected vehicle navigation system
applications) and will automatically renew for each supported application for successive one year periods thereafter,
unless either party provides written notice of termination at least 90 days prior to the expiration of the then-current term
for each supported application. In September 2010, we amended our agreement with Tele Atlas, effective August 1,
2010, to change the fee structure for map and POI data we use to provide our services for Sprint’s bundled offerings.
Pursuant to the amended agreement, we will pay Tele Atlas a percentage of fees we collect from Sprint for basic
navigation services and our gross advertising and mobile commerce revenue and a flat monthly fee per subscriber for
premium navigation services. We also agreed to pay Tele Atlas certain guaranteed minimum payments for such
services. The expiration of the license period for navigation services provided for Sprint’s bundled offerings has been
changed from July 1, 2014 to the earlier of December 31, 2012 or termination of our agreement with Sprint with
respect to the those bundled services. We also obtain map data from Navigation Technologies Corporation, or
NAVTEQ, pursuant to an agreement dated December 1, 2002. Our agreement with NAVTEQ had an initial term of
one year which has been extended until January 31, 2012 and will automatically renew for successive one year periods
thereafter unless either party provides written notice of termination at least 180 days prior to the expiration of the then
current term. Our agreements with Tele Atlas and NAVTEQ also allow a party to terminate the agreement if the other
party materially breaches its obligations and fails to cure such breach. In addition, we obtain other data such as weather
updates, commute alerts, POI and traffic information from additional providers.
Competition
The market for development, distribution and sale of LBS is highly competitive. Many of our competitors
have greater name recognition, larger customer bases and significantly greater financial, technical, marketing,
public relations, sales, distribution and other resources than we do.
Competitors could begin offering LBS that have at least equivalent functionality to ours for free. For
example, Google offers free voice guided, turn by turn navigation as part of its release of Google Maps
Navigation for mobile devices based on the Android 1.6 and higher operating system platform and Nokia
provides a download for its latest version of Ovi Maps on its smartphones which also provides turn by turn
navigation functions. Microsoft also provides a free turn by turn navigation solution with its current Windows
Mobile operating system. Competition from these free offerings may reduce our revenue and harm our business.
If our wireless carrier partners can offer these LBS to their subscribers for free, they may elect to cease their
relationships with us, alter or reduce the manner or extent to which they market or offer our services or require us
to substantially reduce our subscription fees or pursue other business strategies that may not prove successful.
We compete in the LBS market and our primary competitors include providers of LBS such as Google,
Microsoft, Navigon, Nokia, TeleCommunication Systems, or TCS, through its acquisition of Networks In Motion,
or NIM, Telmap and TomTom; PND providers such as Garmin and TomTom; integrated navigation mobile phone
providers such as Garmin and Nokia; providers of Internet and mobile based maps and directions such as AOL/
Mapquest, Google, Microsoft and Yahoo!; and wireless carriers and communication solutions providers developing
their own LBS, such as TeleCommunication Systems through its acquisition of Networks In Motions.
Competition in our market is based primarily on product performance which includes features, functions,
reliability, flexibility, scalability and interoperability; wireless carrier relationships; technological expertise,
capabilities and innovation; price of services and products and total cost of ownership; brand recognition; and
size and financial stability of operations. We believe we compete favorably with respect to these factors based
upon the performance, reliability and breadth of our services and products and our technical experience.
Some of our competitors and potential competitors enjoy advantages over us, either globally or in particular
geographic markets, including with respect to the following:
• significantly greater revenue and financial resources;
13