C a s e 31 TomTom

NEW COMPETITION EVERYWHERE!

I Wayan Purna
51811518
• Tomtom was one of the largest producers of
satellite navigation systems in the world.
• TomTom led the navigation systems market in
Europe and was second in the United States.
 TomTom’s Products
• TomTom Go and TomTom One

They provided Points of Interest (POI) that helped in locating petrol

stations, restaurants, and places of importance and traffic information.
• TomTom Rider

These were portable models especially designed for bikers.

• TomTom Navigator and TomTom Mobile

Both of these applications were compatible with most mobiles and PDAs provided by com-
panies like Sony, Nokia, Acer, Dell, and HP.
• TomTom for iPhone

TomTom drivers to calculate the fastest route

and generate the most accu-rate arrival times
in the industry.
 Company History
• 1991 founded by Peter-Frans Pauwels and
Pieter Geelen, two graduates from Amsterdam
University, The Netherlands
• 1996 the company announced the launch of
Enroute and RouteFinder, the first navigation
software titles.
• 2001 TomTom launched TomTom Navigator,
the first mobile car satnav system.
 Company History
• 2002, the company generated revenue of €8
million by selling the first GPS-linked car
navigator, the TomTom Navigator, for PDAs
• 2005 TomTom completed its IPO on the
Amsterdam Stock Exchange
• 2007, TomTom bid for Tele Atlas, a company
specializing in digital maps.
 TomTom’s Customers
• The first group was the individual consumers who
bought stand-alone portable navigation devices
and services.
• The second group was automobile
manufacturers.
• A third group of customers was the aviation
industry and pilots with personal planes. A fourth
group of customers was business enterprises.
• fifth group of customers, the Coast Guard, was
able to use TomTom’s marine navigational devices
for its everyday responsibilities.
 Mergers and Acquisitions
• 2008, TomTom acquired a digital mapping
company called Tele Atlas.
• 2005, TomTom partnered with Avis, adding its
user-friendly navigation system to all Avis
rental cars.
• TomTom acquired several patents for its many
different technologies.  prevent competitor
to enter the same market.
• TomTom had a strong brand name/image.
 TomTom’s Resources and Capabilities
• three fundamental requirements to a
navigation system
• digital mapping,
• routing technology,
• and dynamic information.
• Unique resources:
• The first of these resources was the in-house
routing algorithms.
• The second unique resource was Tele Atlas and
the digital mapping technology
• The third unique resource was automotive
partnerships with Renault and Avis
 Traditional Competition
• two main companies competitor:
• Garmin, which held 45% of the market share
• Magellan, which held 15% of the market share.
 New Competition Everywhere!
• Cell Phones
• AT&T Navigator
• Online Navigation Applications
• Built-in Car Navigation Devices
• Physical Maps
 Potential Adverse Legislation and
Restrictions
• TomTom issues:
• TomTom dealt with was the possible legislative
banning of all navigational devices from
automobiles
• Issues of legal and political spectrum that TomTom
must focus on was the growing use of GPS devices
as tracking devices.
• Another alarming trend was the rise in PND thefts
around the country
• the aging satellites that supported the GPS system
 Internal Environment
• Finance
• Sales Revenue and Net Income
• Revenue per Segment
• Revenue per Region
• Long-term debt. In 2005, TomTom was a cash-rich
company. However, the recent acquisition of Tele
Atlas, which amounted to €2.9 billion, was funded by
cash, the release of new shares, and long-term debt
• Operating margin. TomTom saw a consistent increase
in operating margin until 2006. However, since 2007,
operating margin has been decreasing for the firm.
• opportunities for TomTom to expand:
– creating digital maps for developing countries and
– creating navigational services
• piggybacked or in independent paths
• Threat: the restriction of certain capabilities
for all of TomTom’s products due to global
terrorism issues.
 Marketing
• increase awareness of brand and strengthen reputation
for providing smart, easy-to-use, high-quality portable
navigation products and services
• Divercivication: provided a range of PND devices like
TomTom One, TomTom XL, and the TomTom Go Series.
• TomTom directed its marketing expenditure toward
B2B advertising that was directed to retailers and
distributors.
• TomTom also invested in an official blog website, as
well as search optimization, which placed it in premium
results in online searches.
 Operations
• The focus of operations had always been on
innovation.
• Bussiness units :
• CONSUMER (B2C), composed of retail sales of PND, on-
board, and mobile;
• AUTOMOTIVE (B2B), composed of auto industry sales of
inte-grated solutions and content & services;
• LICENSING (B2B), composed of PND, auto-motive, mobile,
Internet, and GIS content and services; and
• WORK (B2B), composed of commercial fleet sales of
Webfleet & Connected Solutions.
• TomTom’s supply chain and distribution model was
outsourced
• Content sharing model: high-quality digital maps
along with the connected services, like HD Traffic,
Local Search with Google, and weather I
• In 2009, the cost reductions were made up of
reduction of staff, restructuring and integration of
Tele Atlas, reduced discretionary spending, and
reduction in the number of contractors and
marketing expen-ditures. nforma-tion.
 Human Resources
• the success of individual employees was very
important to TomTom.
• In 2008, TomTom completed its Young Talent
Development Program, which was aimed at
broadening the participants’ knowledge while
improving their technical and personal skills.
 Issues of Concern for TomTom
• First, increasing competition from other
platforms using GPS tech-nology, such as cell
phones and Smartphones.
• Secondly, market saturation.