Google / Android Impact on TT

[Harry6]

How has TomTom been affected by the Google Android ?

When Google pulled the plug on its mapping deal with TomTom and introduced its own mapping app on the Android TT took a big hit. And TT put a lot into buying Tele Atlas.


Now that some time has gone by, how have they been aftected in the short term, and how are things likely to play out in the long term?

 

[tukatz]

I can't give you a good answer to that question, but I can speak to using an Android phone as a GPS. Other than supporting only a single way point, the app I have on my phone does most of the things I would normally use on my TomTom. It even gives me turn by turn directions in Italian. It's good enough that I have left my TomTom at home on a long weekend trip.

 

[mvl]

I think there's been a profound change.

Tomtom had built a business model around high map margins, but with Google they've moved to almost free maps in the USA, and with Nokia the same has happened in Europe.

Seems now they are refocusing their efforts on the best navigation experience, ceding low-end cheapo navigation to the smartphones. They've been focusing on large screen, and in-dash navigation.

I actually think Tomtom got lucky, they spotted the trend early, and (other than Navigon) they are really leading the pack in the next generation of navigation, on phones and in-dash. In my opinion, their strategy the last few years has been the best one possible given horrible market circumstances, and they would have been way more successful if they hadn't laid off too many people and ruined their ability to execute in a timely manner. They're doing massive hiring again, so hopefully Tomtom can right the ship.

They aren't nearly as vulnerable as Garmin, who got locked into a bad NuviFone exclusive deal, and diversified off the dying PND way too late.

 

[gatorguy]

They aren't nearly as vulnerable as Garmin, who got locked into a bad NuviFone exclusive deal, and diversified off the dying PND way too late.

You're right MVL. Other than the $2billion in cash on hand, a successful aviation and marine business in addition to the top position in outdoor handhelds and fitness devices, and matching or exceeding TomTom (so far) in both factory built-in and aftermarket in-dash models, Garmin is much more vunerable.

 

[mvl]

Gator, that line was just bait for you to get into the discussion

 

[dhn]

Gator, that line was just bait for you to get into the discussion

And it seems it worked!

 

[gatorguy]

Microsoft, Google, Apple and cloud-based services have and will continue to change the way we search and navigate. Both Tomtom and Garmin will be entirely different and smaller companies 5-8 years from now because of them. Neither will be independent IMO. Both will still have some demand for pnd's, tho much less than today and targeted for specific regions and uses. I don't pnd's completely disappearing, but certainly more of a niche market. Garmin will be gobbled up by someone, but still be a significant presence in marine/aviation/outdoor. They have a valuable background in hardware development, antenna design and software, and the price won't be cheap to acquire them. TomTom will have shed TeleAtlas by then, and largely out of the hardware business altogether. I see them back to their original business of software development and services, with traffic reporting being their most significant asset, if not sold off by then. Of the two big guys, Garmin is the most likely to remain a personal navigation "name" in specialized markets. The way navigation is provided and presented will have very little resemblance to anything we see today. Heads-up displays on car navigation, and 3D immersive screens on smartphones will be common. Augmented reality will be the norm on both. Routing services in Europe and NA will be highly personalized, much of it location-based and targeted to specific consumer-types and even individuals. Mapping will be on-demand, with the typical raster-based maps of entire continents we use today considered as old-school as paper ones. App Markets as they are now will be long-gone, and standalone navigation apps will be nonexistent, with even the most basic communication/data devices having intelligent routing systems provided and paid for by advertisers, retailers and financial services. And none of us will be arguing about who's got the best models, Garmin or Tomtom.

 

[mvl]

While I share most of your vision, I don't agree with the PND. Even the remotest corners of the world have mobile phones, and as all mobile phones have navigation, there will be no need for PND hardware.

Similarly, every single car (except the cheapest ones without power windows) will have in-dash navigation.

By 2015, any navigation screens less than 7 inches (eg anything not-in-dash) will be outlawed, as people start realizing just how unsafe they really are. Right now, the added safety of "knowing where you're going" is masking the dangerous effect of sub-7-inch PND screens. As studies come out showing large-screen vs small-screen safety records, the truth will become clear and politicians will react.

So I feel the PND will virtually "disappear" from a sales standpoint. And that's not the distant future, my date is 1/1/2013.

When it comes to maps, I don't believe in pure cloud. There is immense costs in transmission anywhere outside metro areas, so the world will move to Ovi-style on-demand plus pre-downloaded mapping. Crowdsourcing is here to stay, and as "false mapshares" get legally regulated like graffiti, the cost of mapping will continue to decrease.

I don't believe there's money in location-based marketing. There will be ITU standards of pushing location-based ads to devices near you and the costs will plummet, so storefronts will be able to bypass the advertising likes of Google. Location-based intermediaries are like the 1980's travel agents, making sense of a confusing market, but have no valuable role once technology replaces them. And I predict this will happen before location-based investors even see a cent of positive ROI. Someone will do to Google what Google did to Tomtom, offer the perfect customer eyeball for free, in exchange for something unrelated like the transaction checkout commission.

The future of Garmin & Tomtom? Well there are separate specialties within navigation: antenna, input interface, output interface, map(including traffic), and routing. Antenna, map, and routing are just about perfect, so I see no further R&D there, just licensing of existing patents until they expire. Output interface is the move to in-dash/augmented reality for the car, and mobile phone for pedestrian. And input interface has the most innovation.

So Tomtom will ride its patents out licensing it's map/traffic/routing IP (either independently or via acquisition). It's output interface is a leader in in-dash, and may soon build scale that creates real barriers to competition.

Google, Apple, and someone else (maybe Adobe) will end up owning the smartphone output interface. Sirf, and Global Locate will own antennas.

The only real innovation left is in input interface, it's the worst part of today's navigation. Who knows, maybe someone will come out of nowhere here, like IBM Watson.

Garmin's not a leader in any of this. It led the "all-in-one" PND, but with the PNDs death all it has left is its stellar brand name. It has to figure out its new future soon, though its cash buys Garmin time. Perhaps someone like Nokia will buy them, to gain better USA brand recognition.

 

[gatorguy]

Ah, drinking the TomTom Kool-aid I see.

Garmin has been in aftermarket in-dash since 2007. At the same time that TomTom was rolling out dozens of press releases concerning their Sony partnership this year, Garmin was quietly developing yet another in-dash model with their partner Kenwood. And don't forget their collaboration with Panasonic since 2008, developing still more in-dash models. And of course Garmin navigation has been found in factory new Audi's, Nissan's, Subaru's and Chrysler products for several years. An unusual contract to provide both hardware and software for some Chrysler audio/nav models was announced just before CES (Note that Garmin build's their own hardware in their own factories in Taiwan). Going by the tone of TT press releases, you'd think it was an original TomTom idea, breaking new ground and totally unique. Actually they're late to the party. FWIW, Bosch has the majority of the factory navigation business rather than either Garmin or TomTom who are both far, far behind. Neither can supply a competitive integrated audio/navigation unit when up against the likes of the German's, or even Continental or Harmon, two other big in-dash hardware suppliers. Thus the Garmin or TomTom value is in advice/expertise in navigation, not production where the real profits are. In fact TomTom has never built a single device that I know of, instead depending on the Chinese to design and build the hardware under contract, while TomTom does the software development (where the problems have been the past couple of years). And frankly, the future vehicle infotainment centers won't be the 5-8" touchscreen audio systems with included routing that you typically see today. I doubt we'll see laws requiring 7" screens in vehicles since traditional pressure-sensitive or capacitive displays will begin to disappear within just a few years. And in the rapidly changing mobile landscape, while TomTom has a single product for a single platform (iOS), Garmin offers products for Blackberry, Android or Apple, new weather apps for Android/Apple, and a new auto diagnostic tool using their EcoRoute HD cable and your Android smartphone.

But when it comes to media relations and the press, TomTom really shows their expertise. Who else could make the addition of a single new feature to their mobile app (geo-coded photo navigation) sound like a game-changing major upgrade, unmatched by anyone else? Or pay for an outside audit of it's procedures in the TeleAltas division, but manipulate the words in the report to make it appear they were superior to Navteq mapping in an independant review?

Anyway, it's been a fun discussion. The next few years will certainly be interesting, and the future's of both Garmin and TomTom far from certain.

 

[dhn]

Hot tip........

future of PND's ;

Honest!!

 

[gatorguy]

DHN, believe it or not I read some article not long ago that had navigation and an Etch-a-Sketch somehow connected. Can't for the life of me remember what it was now.

 

[mvl]

Ah, drinking the TomTom Kool-aid I see.

Garmin has been in aftermarket in-dash since 2007.

Ahh... so the problem is that Garmin hasn't shared their Kool-aid for anyone to drink I'm not worried about Garmin any longer if they have that level of in-dash expertise, it's dumb of them (from an investor relations standpoint) not to highlight it.

I don't think full end-to-end hardware building is all that necessary on the in-dash front, as nav apps can certainly be made and slightly tuned to a manufacturer.

It'll be fun to see developments as the PND dies. I absolutely hate the PND form factor, and can't wait until all the IP-empire-building runs out of time, so people can get navigation where they want it.

 

[Rick F.]

Interesting discussion. I see that Garmin might be going that way.

 

[daveoftruro]

Not just two giants

This appears to have turned into a battle between two giants, but that is because satnav historically has depended upon developing PND hardware. No one can go into that area without serious cash.

Now mobile phone manufacturers are doing all that hard work, it only(!) remains necessary to write the software.

Even the sales and marketing is as simple as putting the software onto the App store. The competition is now open to everyone and their dog.

We have already seen CoPilot enter the market with a lower priced offering. It may not be fantastic but it works. I predict there will be many others.

This will not be a competition of two giants, but of two wilted giants trying to maintain their position as many others move in.

 

[KKop]

What I don't understand (in light of the competition from Google) is why TT is dumbing down the software with every new generation, making users like us jump through hoops to get the old functionality back? They should be distinguishing themselves by including MORE functionality, not less.

As long they keep going it alone they are fighting a losing battle. IMO the only long term solution to the google threat is to open up the PND hardware to software development by third parties (perhaps even running Android

How cool would it be to have an 'app store' for your TT PND? TT could take a cut from the sales (like Apple in the iTunes store) and also still make money off the hardware and maps.