TeleNav 2011 Annual Report Download - page 32

Table of Contents
mobile phone providers will have to continue to invest in developing mobile phones that are compatible with the advanced network technology
that wireless carriers are deploying to increase network capacity and speed. If our wireless carrier customers fail to select mobile phone
providers whose products have superior GPS capabilities or fail to adopt other advanced technologies, our ability to sell our LBS may suffer. If
we do not extend our client software to these devices in a timely and efficient manner before the initial commercial launch of the mobile phone,
our adoption rates will suffer. In addition, if our wireless carrier customers select mobile phones that are incompatible with our LBS client
software, we will incur additional time and expenses to extend our services to those devices, which may cause us to incur unanticipated
operating expenses and miss product launch windows. Because of short product life cycles in the wireless communications industry, if we fail to
integrate our software on a mobile phone prior to its commercial launch or if it is preloaded with another provider’s LBS, we may lose a
substantial opportunity to gain end users who purchase that device and our revenue may suffer.
The rapid transition occurring in the market for mobile phones from feature phones to smartphones creates opportunities for competitors to
enter the market for our LBS services with wireless carriers that traditionally provided a single option for their platform. This shift in consumer
hardware choice may result in more competitors targeting the smartphone opportunities at lower prices without having to cooperate with the
wireless carrier. We traditionally benefited in our relationship with wireless carriers through their distribution of our application for their devices
as the pre-
loaded option for end users. As end users become accustomed to searching out their own applications generally they may also seek out
more alternatives for their LBS application.
Successful sales of our LBS depend on our wireless carrier customers keeping pace with changing consumer preferences for mobile phones
and our ability to appeal to smartphone users with more application options. If our wireless carrier customers do not select mobile phones with
the design attributes attractive to consumers, such as thin form factors, high resolution screens and desired functionality, customers may select
wireless carriers with whom we do not have a relationship and subscriptions for our LBS may decline and, consequently, our business may be
harmed.
A large percentage of our research and development operations are conducted in China and our ability to introduce new services and
support our existing services cost effectively depends on our ability to manage those remote development sites successfully.
Our success depends on our ability to enhance our current services and develop new services and products rapidly and cost effectively. We
opened two research and development centers in China, in addition to our existing facility, for the purpose of conducting more fundamental
product development in those locations. We currently have a majority of our research and development personnel in China. As we do not have
substantial experience managing core product development operations that are remote from our U.S. headquarters, we may not be able to
manage these remote centers successfully. We could incur unexpected costs or delays in product development that could impair our ability to
meet market windows or cause us to forego certain new product opportunities.
Because our long term success depends on our ability to increase the number of end users located outside of the United States, our business
will be susceptible to risks associated with international operations.
As of June 30, 2011, we had international operations in China, the United Kingdom and Brazil. Our experience with wireless carriers and
automobile manufacturers and OEMs outside the United States is limited. Although we have entered into agreements with 14 wireless carriers to
provide our LBS in 29 countries and in absolute dollars our revenue from international operations increased in each of the periods presented, our
revenue from the United States comprised 96%, 97% and 96% of our total revenue for fiscal 2009, 2010 and 2011, respectively. Our limited
experience in operating our business outside the United States increases the risk that our current and future international expansion efforts may
not be successful. In particular, our business model
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