TomTom Mobile: no App, LBS platform instead

Three months after announcing off-board solution, TomTom shifts strategy



TomTom Mobile: no App, LBS platform instead
TomTom’s CEO Harold Goddijn, speaking today at the Fourth quarter conference call earnings with analysts, once again clarified the strategy of its company towards the mobile industry. While three months ago the Dutch company intended to sell off-board navigation, now the focus seems to be on LBS platform.

“If you look at our business strategy in mobile”, he said,” I don’t think we should aim to develops tens of small applications, with different phones, different form factors, different operating systems and different functions. That is an awful of complexities to deal with. I don’t think it would be a good strategy for us to try to do everything ourselves and build large engineering teams to do specific applications for very specific phones or network operators.

However, our strategy is based on the idea of making it simple for networks operators, handsets manufacturers and systems integrators to use Tele Atlas maps in their mobile applications and that involves not only the content but it also involves technology to be able to deploy that content in a very cost effective way that shortens the time to market and the cost of developing these applications.

So what you will see coming out of Tele Atlas-TomTom is a set of tools and platforms to make it easy and fast to deploy location-based services in a variety of applications and contexts. That platform of development, you can see some of that if you go to our website and see our route planner. That is a branded expression of those platform tools, but you can expect further development in that space. We will make that type of development available in a white label to a wide variety of customers in the mobile space for them to develop specific applications.

With such a clarification of TomTom strategy in the mobile space there is a clear shift from what was stated a quarter ago by Harold Goddijn: the development of an off-board navigation system. The exact quote from the October 28, 2008 earning calls is the following: “We are intensifying our development efforts in the mobile space both with on-board and off-board solutions. We are targeting handset manufacturers and network operators as well as everyone that would like to license under their own label. This is an activity we started a couple of months ago. We expect to go to market with first product in the first part of 2009 with a first off-board product I should say, because on-board products we are still shipping successfully.”

With this new strategy TomTom expects to play in the LBS platform arena where Google, Microsoft, deCarta, Autodesk and others have been offering their solutions for years. TomTom is coming late to this market and trying to bundle these services with home-made content (Tele Atlas map data, HD traffic) is perhaps not the best way to succeed.

At the end of the day it seems TomTom decided to reduce its ambitions in the mobile space due to the high debt occurred by the acquisition of Tele Atlas. It is likely that the engineers supposed to develop this off-board navigation have been part of the job cuts announced a few weeks ago.


Tuesday February 24, 2009
Ludovic Privat




1.Posted by scott on 2009-02-25 09:59
Looks TomTom can not decide on their strategy since Ribbink left the company in 2008. You can hardly argue that "set of tools and platforms" is a strategy that is going to be successful.

2.Posted by engineer on 2009-02-26 10:51
I am that engineer and i am not fired

3.Posted by Raphaël on 2009-02-27 10:50
Hi Ludovic
What do you mean by "is perhaps not the best way to succeed".
Don't you think that coming with packaged offer (including high value content such as Traffic HD...) can be a good strategy ?
For sure, many LBS platform have troubles when trying to sublicence content for third parties, mainly because Content providers prefer to set as many deals as possible.
As TT/TA distributes its own content, it can really make the difference.

4.Posted by Ludovic Privat, Editor on 2009-02-27 11:48
Hi Raphael,
Good point. Let me clarify and expand a bit my thoughts on that particular topic.

For sure TomTom can offer a good package of services that include mapping, routing and HD traffic in many countries, plus additional dynamic services that the company is currently sourcing from third parties: weather, speed cameras, etc. So from a product perspective it would make sense to source a packaged LBS offering from the TomTom Group.

However, from a strategic, business perspective this is totally different, for two reasons. First, this vertical integration might be scaring a bit some potential customers which probably don’t want to put all their eggs in the same basket. Second, TomTom Group is essentially an end user facing company (90% of its business today) which could in many ways compete with the customers of this LBS service. This is true in the B2C (navigation), but also in the B2B sphere with TomTom WORK (fleet tracking).

So if you are a small player on a niche market it would make sense to use TomTom LBS platform because it is a one stop shopping experience, but if you want to deploy a mainstream application it is likely TomTom is or will be your competitor at some stage. In this case using a smaller independent LBS provider probably gives you more security (non competition) and more flexibility: ie you are not tied to one single provider and can pick and choose the best or the most affordable services.

If you look at what makes money out there today in the location-based services market there is mobile navigation and fleet tracking. The rest is just unproven or with no meaningful revenue today. It does not make a big window of opportunity for a TomTom white labeled LBS platform.

http://www.gpsbusinessnews.com

5.Posted by Gps usa on 2009-02-27 13:46
other things can be read from the statement by TomTom that hey are not going to develop various specific 'small' LBS applications. To me it does not indicate at all they're abandoning this segment.
True, this is a switch in strategy and saving cost.
However, it might indicate TomTom is likely to engage in the near future with a partner that is going to do exactly that (=develop those various ready-to-use 'small' LBS applications). Why not partner with a Vodafone, that recently acquired Wayfinder, just as an example. Revenue with those guys alone would already be a big step forward for TT group compared to where they are now with Wireless carier revenue.
I agree with Ludo's article, but would conclude differently.

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