TomTom: US PNDs to Fall in 2011

share on:

TomTom offered more insight into the challenging portable GPS market Thursday admitting that industry-wide U.S.  sales could start to decline by mid-2011.

While 2010 should see flat global portable navigation device (PND) sales for TomTom, the company noted that industry sales in Europe have started to decline and the U.S. tends to follow the European market by about 18 months.

European PND sales fell 13 percent in the fourth quarter from 4.9 million to 4.3 million units.

On a brighter note, prices will not see the 20 percent slide of 2009 said TomTom CEO Harold Goddijn.  The reason is that more PND consumers are second-time buyers who want more advanced features.  Also, there are fewer competitors.

During a conference call with analysts, Goddijn responded to a question about competition from smartphones stating, “Navigation is happening increasingly across multiple platforms…we think in a strange way they will strengthen each other… PNDs do have a unique position in the space.  We have sold 42 million devices over the past 5 years.  It’s optimized for navigation, fully dependable…not dependent on a network connection and it delivers a trusted dependable user experience. It’s in that context we believe a larger portion of motorists will continue to rely on a product category that has done so spectacularly well in the past.”

However, TomTom itself is broadening into smartphone and automotive GPS which represented 25 percent of revenues for the fourth quarter ended December 31, 2009 compared to about 17 percent earlier. TomTom reported it swung to profitability during the quarter.

TomTom also defended its Tele Atlas maps business outlook, despite the offering of free navigation by Nokia and Google.

In mobile phones, “the map is often seen as the grid to which all the information is referenced.  It’s not just about navigation, but in a way, the map is a mobile browser for many applications.”  Goddijn claims that the “strategic importance of having maps [on phones] has not diminished but has gone up…but the business model is less clear…how are companies going to make money out of the deployment for maps and the licensing of maps.  It’s too early to give hard answers…the industry is trying to figure it out.  But, I do believe for TomTom, there will be great opportunities in licensing and technology deals.  We will learn a lot in 2010 on what we can do with maps in a mobile environment and it will go beyond navigation, obviously.”

Some other notes from the conference call:

Tele Atlas maps are moving from quarterly updates to updates every 48 hours.

TomTom’s success with “LIVE” services such as live searches and advanced traffic  is mixed, it said.  TomTom shipped about 900,000 connected devices in one year and it is serving about 400,000 subscribers, including those on a trial.  “That’s not where we want to be.  We want…it to be a larger proportion of our overall product mix and we’re working hard to make it a reality.”  The good news is that traffic reports are becoming more reliable, he claimed, adding that live traffic “will happen one day.  It will break through into the mainstream.”

TomTom is less certain about its long term future delivering apps to the iPhone.  Although it was happy with the 100,000 iPhone app subscriptions it saw in the fourth quarter,  Goddijn said, “We’re enjoying that, but we’re not building a five year company plan around the app.  It would not be the right thing to do.  It’s a more vulnerable business where you are not completely in control of the product offering and distribution.”  The app will remain an important product for 2010 but “it’s more difficult to predict the possibility for the product over a longer period of time,” said Goddijn.

Want to receive industry news? Sign up here
share on:
<