TeleNav 2010 Annual Report Download - page 25

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2010, respectively. If we were unable to be the exclusive provider of white label navigation services to our major
wireless carrier partners or the number of end users for GPS Navigator were to decline, our revenue would be
substantially harmed. We have experienced a reduction of ARPU from GPS Navigator over time as our wireless
carrier partners implement white label and more bundled offerings, for which we typically receive a lower
monthly subscription fee or a fixed annual fee regardless of the number of end users (subject to specified
thresholds) to which we provide our services. We may be unable to increase our revenue from our MRM
services, and we may not be successful in our efforts to diversify into areas such as in-dash navigation. If we
were unable to offset declining ARPU from GPS Navigator by increasing the number of end users or 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 wireless carrier partners for timely and accurate subscriber 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 partners to bill subscribers and collect monthly fees for our LBS, either
directly or through third party service providers. If our wireless carrier partners 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 wireless carrier. 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.
We rely on a proprietary provisioning and reporting system to track end user activation, deactivation and
usage data and any material failures in this system could harm our revenue, affect our costs and impair our
ability to manage our business effectively.
Our provisioning and reporting system that authenticates end users and tracks the number of end users and
their use of our services is a proprietary and customized system that we developed internally. Although we
believe that the flexibility of this service to integrate tightly with wireless carriers’ reporting and provisioning
systems gives us a competitive advantage, we might lose revenue and the ability to manage our business
effectively if the system were to experience material failures or be unable to scale as our business grows. In
addition, we may not be able to report our financial results on a timely basis if our wireless carrier partners
question the accuracy of our records or we experience significant discrepancies between the data generated by
our provisioning and reporting systems and data generated by the wireless carriers’ systems, or if our systems fail
or we are unable to report timely and accurate information to our third party data providers. The inability to
timely report our financial results would impair the quality of our financial reporting and could result in the
delisting of our common stock.
Our profitability may decline as we expand into other service and product areas and we may be unable to
recoup our investments.
We receive a substantial majority of our revenue from monthly subscription fees paid by wireless carrier
partners who bill their subscribers for our services on a stand alone or bundled basis. As we expand our LBS
offerings to enable end users to purchase our services from application stores outside of wireless carriers’ sales
platforms, we may have to adapt our revenue model to a one time fee for services. In addition, as we enter the
in-dash navigation market or other markets for LBS, we may be required to adopt pricing models other than
monthly subscription fees and may incur cost of revenue substantially different than that which we have
experienced historically due in part to third party content costs. These different pricing models and increased
costs of revenue may result in declines in our gross margins.
We have limited experience in selling our services and products outside of the wireless carrier application
platform. As we expand into new service and product areas, such as in-dash navigation systems, we may not be
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