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New entrants and the introduction of other distribution models in the location- based services market may harm our
competitive position.
New entrants seeking to gain market share by introducing new technology and new products may make it more difficult for us
to sell our products and services and could create increased pricing pressure, reduced profit margins, increased sales and marketing
expenses, or the loss of market share or expected market share, any of which may significantly harm our business, operating results
and financial condition. Consumers can now download and provision applications from individual provider websites and select from
a menu of applications through the Apple iTunes App Store, the Blackberry App World, the Android Market, and other application
aggregators. Applications from other LBS providers may be preloaded on mobile devices by OEMs or offered by OEMs directly.
Increased competition from providers of location-based services which do not rely on a wireless carrier may result in fewer wireless
carrier subscribers electing to purchase their wireless carrier’s branded location-based services, which could harm our business and
revenue. In addition, these location-based services may be offered for free or on a onetime fee basis, which could force us to reduce
monthly subscription fees or migrate to a onetime fee model to remain competitive. We may also lose end users or face erosion in our
average revenue per user if these competitors deliver their products without charge to the consumer by generating revenue from
advertising or as part of other applications or services.
We rely on third party data and content and some licenses to other parties’ technology to provide the services of our wireless
applications business, and if we were unable to obtain content and licenses at reasonable prices, or at all, our gross margins and
our ability to provide the services of our wireless applications business would be harmed.
Our wireless applications business relies on third party data and content to provide those services including map data, points of
interest data, traffic information, gas prices, theater, event, and weather information. If our suppliers of this data or content were to
enter into exclusive relationships with other providers of location-based services or were to discontinue providing such information
and we were unable to replace them cost effectively, or at all, our ability to provide the services of our wireless applications business
would be harmed. Our gross margins may also be affected if the cost of third party data and content increases substantially.
We obtain map data from companies owned by current and potential competitors, who may act in a manner that is not in our
best interest. We may not be able to upgrade our location-based services platform to support certain advanced features and
functionality without obtaining technology licenses from third parties. Obtaining these licenses may be costly and may delay the
introduction of such features and functionality, and these licenses may not be available on commercially favorable terms, or at all. The
inability to offer advanced features or functionality, or a delay in our ability to upgrade our location-based services platform, may
adversely affect consumer demand for the products and services of our wireless applications business, consequently, harm our
business.
Some of our research and development operations are conducted in China, India, and Australia, and our ability to introduce
new services and support our existing services cost effectively depend 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 currently have research and development employees in China and Australia, and contractors in India. Managing
product development operations that are remote from our U.S. headquarters is difficult and 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 it to forego certain new product opportunities. In addition, if our carrier customers become adverse to
introducing products into their networks that have been developed in these remote centers, the market for our products could be
adversely affected.
Our research and development investments may not lead to successful new products, services or enhancements.
We will continue to invest in research and development for the introduction of new and enhanced products and services
designed to improve the capacity, data processing rates and features. We must also continue to develop new features and to improve
functionality of our software. Research and development in our industry is complex, expensive and uncertain. We believe that we
must continue to dedicate a significant amount of resources to research and development efforts to maintain our competitive position.
If we continue to expend a significant amount of resources on research and development, but our efforts do not lead to the successful
introduction of product and service enhancements that are competitive in the marketplace, our business, financial position, results of
operations or cash flows could be negatively impacted.
We could incur substantial costs from product liability claims relating to our software.
Our agreements with customers may require us to indemnify customers for our own acts of negligence and non-performance.
Product liability and other forms of insurance are expensive and may not be available in the future. We cannot be sure that we will be
able to maintain or obtain insurance coverage at acceptable costs or in sufficient amounts or that our insurer will not disclaim coverage
