TeleNav 2011 Annual Report Download - page 31

Table of Contents
If a substantial number of end users change mobile phones or if our wireless carrier customers switch to subscription plans that require
active monthly renewal by end users, our revenue could suffer.
Subscription fees represent the vast majority of our revenue. As mobile phone development continues and new mobile phones are offered
at subsidized rates to subscribers in connection with plan renewals, an increasing percentage of end users who already subscribe to our services
will likely upgrade from their existing mobile phones. With some wireless carriers, subscribers are unable to automatically transfer their existing
subscriptions from one mobile phone to another, or may choose to discontinue our services if their new device has an alternative application pre-
installed.
In addition, wireless carriers may switch to subscription billing systems that require subscribers to actively renew, or opt-in, each month
from current systems that passively renew unless subscribers take some action to opt-out of their subscriptions. In either case, unless we or our
wireless carrier customers are able to resell subscriptions to these subscribers or replace these subscribers with other subscribers, our revenue
would suffer and this could harm our business, operating results and financial condition.
If we are unable to attract new wireless carrier customers, our revenue growth may be adversely affected and our net income could decline.
If we do not add new wireless carrier customers and increase the number of end users who receive our services through those new wireless
carrier customers, we may not be able to increase our revenue in the longer term. Our sales and marketing efforts may not be successful in
establishing relationships with new wireless carrier customers. We will not be successful in expanding into new geographic markets without
developing relationships with successful wireless carriers in those markets. We expect to incur significant additional expenses in hiring
additional personnel and expanding our international operations in order to attract new wireless carrier customers in different geographic markets
to achieve revenue growth. If we fail to attract new successful wireless carrier customers and their subscribers or our new service introductions
are not successful, we may be unable to increase our revenue and our operating results may be adversely affected.
Our lengthy sales cycle makes it difficult for us to predict when we will generate revenue from wireless carrier and automobile manufacturer
and OEM customers.
We have a lengthy and complex sales process. The integration and testing of our LBS platform with a prospective wireless carrier requires
substantial time and expense before launching our LBS with that wireless carrier. In new geographic markets, our sales cycles are typically
longer and may involve more challenges such as language or government regulation/compliance requirements. Even after a wireless carrier
decides to launch our LBS, the integration of our LBS platform with a wireless carrier’s network and billing systems generally requires several
months to complete. Moreover, launch of our LBS by a wireless carrier typically may be timed to coincide with a new mobile phone launch,
over which we have no control. In addition, being selected to participate and designed into new vehicle models is a lengthy and time consuming
process and our LBS platform may not be included for factors beyond our control if we are participating in the vehicle with an OEM. Because of
these lengthy cycles, we may experience delays from the time we begin the sales process and incur increased costs and expenses to obtain a
partner as a customer and integrate our LBS platform until the time we generate revenue from such wireless carrier, OEM or automobile
manufacturers. These delays may make it difficult to predict when we will generate revenue from new customers.
The failure of mobile phone providers selected by our wireless carrier customers to keep pace with technological and market developments in
mobile phone design and the rapid transition in the industry from feature phones to smartphones may negatively affect the demand for our
LBS.
Wireless carriers select various mobile phones to run on their wireless networks. Our future success will depend on these mobile phone
providers’ ability to design and manufacture mobile phones that meet the demands of wireless carriers and their subscribers. In order to continue
their relationships with the wireless carriers, these
27