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TomTom Needs To Diversify Faster
Article by: Darren Griffin
Date: 30 Sep 2011
TomTom Chief Executive, Harold Goddijn has admitted that TomTom's diversification strategy isn't happening as fast as desired.
In an interview with CNBC today he said, ""We need to get through the transition. It's not going fast enough, but in the meantime the underlying fundamentals are OK."
TomTom has been working hard to increase its presence in the automotive and service sectors and has made inroads into the car market signing partnerships with Renault and Fiat but the markets need to see more progress into new markets if TomTom's share price is to recover.
PND sales are at an all time low with consumers opting for cheaper smartphone based solutions. Corinne Vigreux, TomTom MD, said that the decline was expected to stabilise soon.
TomTom has seen its share price fall from a high of €70 per share in 2007 and is now hovering at around €3 following market concern over the balance sheet following the Tele Atlas purchase.
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 Posted by M8TJT on Fri Sep 30, 2011 2:52 pm |
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| News Team Wrote: | TomTom Chief Executive, Harold Goddijn has admitted that TomTom's diversification strategy isn't happening as fast as desired.
In an interview with CNBC today he said, "We need to get through the transition. It's not going fast enough, but in the meantime the underlying fundamentals are OK." |
Are they? Does he not read his forum?
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| Posted by MikeB on Fri Sep 30, 2011 5:49 pm |
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I wonder if this means that investment in the Tele atlas side of the business will suffer, I expect it will. Couple this with the news that Nokia is not investing in Navteq and you are looking at some serious issues in the maintenance of the digital maps.
This is pretty much along the lines that I was predicting some time ago with the current user expectations of getting free navigation and relying on open street mapping or google maps to provide it. This forces others into providing free or reduced price services and eventually these companies go out of business leaving us with no data provider...
I know we are not quite that far down the line yet, but the writing is on the wall!
Mike Barrett |
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| Posted by xtraseller on Sat Oct 01, 2011 7:28 am |
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Definitely - this is why we should all subscribe to the mapping updates for our units, whatever they are and what form they come in to support the data services we rely upon
In return, we should be guaranteed minimum levels for accuracy and where both services could easily improve upon is reaction to customer feedback on mapping errors
That way, we could all be happy!
TomTom Go Live 6100, 600
Garmin DriveLux 50, D-Smart 70, NuviCam, 3598, 2699, 2798
Mio Navman 695
Nexus 6p, Apple iPhone 6sPlus and Microsoft Lumia 950xl running TomTom, Garmin, CoPilot, Navigon, Sygic, Here Drive, Google, Waze, MS Maps |
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| Posted by DennisN on Sat Oct 01, 2011 8:32 am |
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Sure. And whilst you're all out there buying stuff from TomTom to keep them in healthy profit, at the same time you can start giving me deliveries to keep me in holiday money! 
I buy from TT because they've got something I want, not to keep them in business. It's up to them to keep offering what the public wants, and the recent (and ongoing) fiasco over HD Traffic service and reduced functionality of the latest models are NOT the ways to do that.
Dennis
If it tastes good - it's fattening.
Two of them are obesiting!! |
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| Posted by xtraseller on Sat Oct 01, 2011 9:31 am |
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Yes exactly - improved map accuracy and in particular quick correction of multiple user-reported map errors is our benefit. That would be the deal
I think a subscription model for units (ie. cost to cover hardware to buy, monthly subscription of say £5 to include all updates) would be something I would love
That way they wouldn't have to rely so much on creating new units to woo us all, a subscription including software updates, map and HD traffic would be ideal
TomTom Go Live 6100, 600
Garmin DriveLux 50, D-Smart 70, NuviCam, 3598, 2699, 2798
Mio Navman 695
Nexus 6p, Apple iPhone 6sPlus and Microsoft Lumia 950xl running TomTom, Garmin, CoPilot, Navigon, Sygic, Here Drive, Google, Waze, MS Maps |
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| Posted by mikealder on Sat Oct 01, 2011 10:30 am |
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For far too long TomTom has lived on marketing hype and innovative ideas that seem great when released. Sadly all too often these innovative ideas turn in to nothing more than a damp squib. This continual poor experience that customers experience will force them to shop around, brand loyalty is one thing but not if the brand has already left a soured taste.
Take MapShare. What a great idea, why then do so few user changes make it in to the map? What's worse is that user changes don't even stay on the device when the map is updated, leaving a user to re-enter all their hard work time and time again.
Speech control, why bother with it? Entering anything using this system takes longer than tapping the screen, it does nothing more than frustrate me when I have tried it, but still its played out as a major selling point.
Dumbed down user interface and less options available on the newer products will cause established customers to look for alternate brands.
Dropping itinerary planning from the newer models being one such example, adding a four point via system in lieu of true itinerary mode is poor form and shows a lack of understanding as to what end users expect from a nav. unit.
Now look at the reduction in hardware quality, batteries that fail in a very short time when compared to the earlier products, built in flash memory that is slow in use and again prone to failure, all leaves users with little option but to bin the product.
Lack of a memory card slot which prevents users from purchasing alternate maps to cover holiday trips or recover a unit suffering from flash memory failure.
Even on the newer units running Navcore 10 that do have a memory card slot, it isn't enabled for use , I wouldn't hold my breath as to when they will turn it on.
Degraded mapping. If you purchased a device with full European mapping, and follow the recommended three monthly map update you will now have a zoned Euro map making pan-European travel with the device impossible without carting around a laptop.
The above is just a small summary as to some of the reasons their so called "transition" is causing sales to falter. They need to sit down and actually accept that they have got the current product range wrong - Mike
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| Posted by peterc10 on Sat Oct 01, 2011 7:54 pm |
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In 20 years time I reckon TT will be held up by business schools as being a case study in how market leaders can become so complacent that they lose their way and their market.
IF they are still around then I suspect they they will probably be a small niche market player. [/b]
Peter
HTC Sensation
Sygic GPS for Europe (No more TT "support"!)
Copilot for USA
Bury CC9060 bluetooth car kit & Brodit mount |
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| Posted by tomtom_shareholder on Sat Oct 01, 2011 10:00 pm |
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| MikeB Wrote: | I wonder if this means that investment in the Tele atlas side of the business will suffer, I expect it will. Couple this with the news that Nokia is not investing in Navteq and you are looking at some serious issues in the maintenance of the digital maps.
This is pretty much along the lines that I was predicting some time ago with the current user expectations of getting free navigation and relying on open street mapping or google maps to provide it. This forces others into providing free or reduced price services and eventually these companies go out of business leaving us with no data provider...
I know we are not quite that far down the line yet, but the writing is on the wall! |
Mike,
I don't think Navteq layoffs means that TeleAtlas will also lower their expenses. This year TomTom profit is expected to decrease, mainly because they do not want to lower their expenses in research, mapping and geographical expansions like these http://www.zigwheels.com/news-features/news/tomtom-launches-satellite-navigation-units-in-india/9771/1
All revenues apart from PND's are increasing. Especially the in-dash systems http://automotive.tomtom.com. But also HD traffic subscriptions, app sales and business solutions (fleet management) are growing.
The problem is PND sales declining at a pace that is too fast for the other growing parts to compensate. I'm trying to figure out at what point the non-PND activities are a bigger than PND sales and the company will grow again. My guess it will take about a year.
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| Posted by tomtom_shareholder on Sat Oct 01, 2011 11:27 pm |
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| xtraseller Wrote: | Yes exactly - improved map accuracy and in particular quick correction of multiple user-reported map errors is our benefit. That would be the deal
I think a subscription model for units (ie. cost to cover hardware to buy, monthly subscription of say £5 to include all updates) would be something I would love
That way they wouldn't have to rely so much on creating new units to woo us all, a subscription including software updates, map and HD traffic would be ideal |
Totally agreed. I also told them this.
At this point there are a lot of customers, who never update their map. In their mind they pay for a piece of hardware. So maps feel very expensive for them. Also (partly because of Google maps) they think maps are something that has a low value. Even though they are quite expensive to maintain.
People not updating maps isn't beneficial for people trusting their GPS. Which is something TomTom should want to avoid, especially with HD traffic, where you want people to trust the adviced alternative route.
So if TomTom would lower the price of map updates and make it subscription based, including HD traffic and software updates, more people would use it. It would not only help covering expensed on map updates, but in general it would be beneficial for customer experience.
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| Posted by MikeB on Sun Oct 02, 2011 1:01 am |
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| tomtom_shareholder Wrote: | | The problem is PND sales declining at a pace that is too fast for the other growing parts to compensate. I'm trying to figure out at what point the non-PND activities are a bigger than PND sales and the company will grow again. My guess it will take about a year. |
Who is to say that these new market sectors will compensate or grow the company? TomTom invested in Tele Atlas and from the looks of the market they vastly overpriced it.
TomTom are no longer a private concern and have to make sustainable profits for their shareholders and protect the investments as best as they possibly can. With a shareprice crash over the last 4 years they are clearly not on track.
You mention Live service subscriptions as part of the growth, but I think that the majority of the live users are as a result of the free subscription from buying the device. I dont think the take-up for paid subscriptions is that good. In other areas they are producing apps but not exploiting the full potential of the market. There is nothing available for Android, Windows Phone, Nokia, RIM etc.
As for the in-car market it is still embryonic and as yet the business models are still being developed, but at some point we will understand the depth of the demand for these systems.
In the mean time as you rightly point out TomTom must spend money on R&D, they must also invest in their mapping and make improvements in other existing areas all with a limited amount of capital. At some point something must break.
I predicted this nearly 2 years ago when Nokia after buying Navteq announced free OVImaps ( http://www.pocketgpsworld.com/Nokia-announce-FREE-OVI-Maps-for-all-1107.php ). This was clearly not sustainable and now Navteq are feeling the pinch. How much longer will it be before TomTom are forced to do the same to Tele Atlas (sorry TomTom Maps).
Mike Barrett |
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