TeleNav 2011 Annual Report Download - page 35

Table of Contents
Wireless communications have experienced a variety of outages and other delays as a result of infrastructure and equipment failures and
could face outages and delays in the future. These outages and delays could affect our ability to provide our LBS successfully. In addition,
changes by a wireless carrier to network infrastructure may interfere with the integration of our servers with their network and delivery of our
LBS and may cause end users to lose functionality for services they have already purchased. Any of the foregoing could harm our business,
operating results and financial condition.
We cannot control the quality standards of our wireless carrier customers, their mobile phone providers and other technology customers.
We cannot guarantee that the mobile phones are free from errors or defects. If errors or defects occur in mobile phones or services offered by our
wireless carrier customers, it could result in consumers terminating our services, damage to our reputation, increased customer service and
support costs, warranty claims, lost revenue and diverted development resources, any of which could adversely affect our business, results of
operations and financial condition.
Mergers, consolidations or other strategic transactions in the wireless communications industry could weaken our competitive position,
reduce the number of our wireless carrier customers and adversely affect our business.
The wireless communications industry continues to experience consolidation and an increased formation of alliances among wireless
carriers and between wireless carriers and other entities. Should one of our wireless carrier customers consolidate or enter into an alliance with
another carrier, this could have a material adverse impact on our business. For example, our wireless carrier customer Alltel was acquired by
Verizon in early 2009. Although we had an agreement with Alltel to be the exclusive white label provider of navigation services, Verizon elected
to discontinue selling mobile phones preloaded with our LBS. We have experienced a decline in our revenue from the combined entity as a result
of this decision, and expect this decline to continue. Such a consolidation or alliance may cause us to lose a wireless carrier customer or require
us to reduce prices as a result of enhanced customer leverage, which would have a negative effect on our business. We may not be able to
expand our base of wireless carrier customers to offset revenue declines if we lose a wireless carrier customer or if the number of end users for
our services declines.
In addition, if two or more of our competitors or wireless carrier customers were to merge or partner, the change in the competitive
landscape could adversely affect our ability to compete effectively. We have agreements with both AT&T and T-Mobile, and if the proposed
acquisition by AT&T of T-Mobile is completed, our arrangements with AT&T and/or T-
Mobile may be adversely affected. Our competitors may
also establish or strengthen cooperative relationships with their wireless carrier customers, sales channel partners or other parties with whom we
have strategic relationships, thereby limiting our ability to promote our LBS. These events could reduce our revenue and adversely affect our
operating results.
Reduced expenditures for mobile phones or wireless services due to adverse or uncertain economic conditions may negatively affect our
business and results of operations.
Recent adverse economic conditions and future uncertainties may directly affect the marketing and distribution of mobile phones and our
LBS by our wireless carrier customers. As current and future conditions in the domestic and global economies remain uncertain, it is difficult to
estimate the level of economic growth, which may cause some wireless carriers to emphasize marketing basic voice services rather than data
services, such as LBS. In addition, subscribers may try to reduce their monthly expenses by reducing spending on discretionary wireless
services, such as ours. Accordingly, the future direction of the overall domestic and global economies will have an impact on our overall
performance. Economic conditions are beyond our control. If these economic conditions worsen or fail to improve, we may experience reduced
demand for and pricing pressure on our LBS, which could harm our operating results.
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