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TomTom - Tele Atlas Is Not For Sale
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Darren
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PostPosted: Thu Apr 07, 2011 9:25 am    Post subject: TomTom - Tele Atlas Is Not For Sale Reply with quote

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A number of sites have posted news of the rumoured sale of Tele Atlas, TomTom's mapping business, in recent days.

However, TomTom have gone on record to say they are not putting Tele Atlas (now incorporated into TomTom and so technically no longer known at Tele Atlas) up for sale and that the mapping division is considered a core asset.

TomTom have been struggling against the tough market conditions which ever since the they spent $2.9 billion on the Tele Atlas purchase. The economic crisis could not have come at a worse time for them with their cash reserves depleted by the purchase.

However, they have recently agreed a $400 million re-financing deal with Dutch bank ABN Amro which will put them on sure footing for the next five years and given the difficulties that Nokia now face, it could be argued that TomTom are now in the stronger position with a strong portfolio of products and some sign that the worst has passed and recovery is beginning to take effect.


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tomtom_shareholder
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PostPosted: Fri Apr 08, 2011 8:57 am    Post subject: Right Reply with quote

I might be slightly biased (considered my nickname) but I think you are very right.

First of all, it would be technically challenging trying to seperate teleatlas from tomtom. For instance, with 'mapshare', tomtom drivers can share route changes which are then checked and actively changed within the maps. This is a costsaving way to keep maps updated, and keeps mapquality up.

Also, TomTom is now more about content and services, rather than devices. They now bring navigation to a sportswatch, PND, smartphone and built in-dash in cars from brands like Renault, Fiat, Mazda and Toyota. So the actual device doesn't really matter. That's more like a piece of plastic. It's all about mapquality and the best live traffic information.

A few years ago, Nokia was much feared. Because people tended to look at tomtom like a manufacturer of specific devices (PND's). This is changing. One exemple is the fact that they now licence their maps to HTC, who uses their maps in their smartphone models. They also licence maps to other car manufacturers like those mentioned above, who don't use tomtom for in-dash equipment. So those are map-only deals.

I also heard CEO Goddijn say to financial analysts that they are now answering RFP's (requests for proposal) for some car manufacturers, who want to go beyond a map-only deal, and might shift to in-dash navi systems as well. He couldn't be specific though, because it's just in an RFP stage, so it's not sure if new deals will be signed.

All in all there are different ways to find revenue streams for TomTom. Also I'm confident with the refinancing. They bought TeleAtlas for almost 3 billion, and debt is down to 400 million. That's a considerable delevarage in just a few years.
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PostPosted: Fri Apr 08, 2011 6:23 pm    Post subject: Re: Right Reply with quote

tomtom_shareholder wrote:

TomTom is now more about content and services, rather than devices. They now bring navigation to a sportswatch, PND, smartphone and built in-dash in cars from brands like Renault, Fiat, Mazda and Toyota. So the actual device doesn't really matter.


I have to disagree with you there...
To me, TomTom's reputation is ALL about the lump of plastic on my dashboard with "TomTom" written on it.

If they could use the technological advances evident in the new Go1000 models and produce a satnav with all the features and expandability they used to have a couple of years ago, a hell of a lot more people would buy one.

But you're right that TT don't seem to think like that any more. Crying or Very sad
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PostPosted: Fri Apr 08, 2011 6:34 pm    Post subject: Reply with quote

Don't you find rumours in the context of financial wheeler-dealering usually have some meaning? No idea about what could be happening, but it could be suggested that mapping needs more investment to get it uptodate than Tomtom are prepared to admit. The last thing you tell lenders is how desperate you are for money as the interest rates then go up, or potential buyers reduce their offers.
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PostPosted: Fri Apr 08, 2011 7:56 pm    Post subject: Re: Right Reply with quote

tomtom_shareholder wrote:
First of all, it would be technically challenging trying to seperate teleatlas from tomtom. For instance, with 'mapshare', tomtom drivers can share route changes which are then checked and actively changed within the maps. This is a costsaving way to keep maps updated, and keeps mapquality up.
Presumably as difficult as taking over TA in the first place?
tomtom_shareholder wrote:
One exemple is the fact that they now licence their maps to HTC, who uses their maps in their smartphone models. They also licence maps to other car manufacturers like those mentioned above, who don't use tomtom for in-dash equipment. So those are map-only deals.
Ah, I see, just like TA used to do? What's new and exciting about that?
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PostPosted: Sat Apr 09, 2011 6:40 pm    Post subject: Re: Right Reply with quote

Quote:
Ah, I see, just like TA used to do? What's new and exciting about that?
I agree. But at first it looked like TomTom bought TA as an extention of their portfolio. Now it's more like content & services are the core of the company. So that's why I think they won't sell it. I think smartphones accelerated importance of maps and decreased importance of nav devices.
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PostPosted: Sat Apr 09, 2011 7:13 pm    Post subject: Re: Right Reply with quote

tomtom_shareholder wrote:
with 'mapshare', tomtom drivers can share route changes which are then checked and actively changed within the maps. This is a costsaving way to keep maps updated, and keeps mapquality up.

As a biased "Insider", could you be so kind as to give us the definitive story of HOW and WHEN and BY WHOM changes are checked, so that mapquality can be "up"?

For example, if you receive, time after time, after each new map update, corrections submitted by three separate users of the identical data (so maybe after three new maps you've had the same identical corrections NINE times), how and when will those submissions be checked? - you've been notified of them nine separate times.

Could you also explain why MapShare is still unable to put the correct speed on my TomTom when I do a correction? (I corrected a motorway speed limit to 70 mph, but TomTom device reads 71mph. Could you explain why it has been doing this ever since MapShare was introduced with the x20 range?
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PostPosted: Sun Apr 10, 2011 10:13 am    Post subject: Reply with quote

@Dennis: I canít answer your mapshare question, because I donít know much about it technically. You can ask at the forum on tomtom.com. Itís moderated by tomtom people, so they should know.

@Andy_P. I understand your comment that TomTom is still much about a piece of plastic with TomTom written on it. They wonít change overnight. That would be risky, since 60% of their revenue is still PND. Also, they donít want to give away any PND marketshare to Garmin. Also, if you own a PND in your car, it makes sense to regard TomTom as being a PND manufacturer.

Let me explain a little about myself. The question was whether or not TeleAtlas (aka TomTom maps) is for sale. I look at this question from a small shareholder point of view. Iím a marketing and strategy consultant who recently decided to buy some TomTom shares and hope to make some money with it. Since then I try to read a lot about the satnav business to check if I made a right decision.

I look at tomtom from a strategy perspective. The first question I asked myself is why TomTom paid so much money for an overpriced TeleAtlas. I think that in 2007 TomTom already feared they would become a one trick pony. If revenue models would change to so-called Ďrazorblade modelsí (where you pay a small price for the device and pay for live services and map renewals afterwards), then TomTom would only be the razor and not the blade. Especially when smartphone market would grow.

So TomTom was eager to buy teleatlas and got themselves in a huge debt, just before the financial crisis. This got them into near bankruptcy. Not because sales went down: cashflow was always good and TomTom was a popular brand. But because some banks tried to pull themselves out of a banking agreement. Now almost four years later, they repayed most of the debt, and are back on Ďsure footingí, as mentioned above in the article.

I read some reports from TomToms management and listened to them talking to financial analysts. This gave me some insight about how these people think. Since then the takeover of TeleAtlas to me looks more like a Ďreverse takeoverí. Like TeleAtlas took over TomTom. The maps, content and services are in the centre, and devices are more like Ďchannelsí to sell them. Just like smartphones, watches or cars can be channels.

For instance, CEO Goddijn told to shareholders that they worked very hard to get good maps of India. And now that they have confidence about the maps, they want to settle in India and explore that market. So that strengthens my idea that it is maps first, devices second.

@M8TJT Off course it is technically possible to seperate teleatlas from tomtom. It might take some time because you have to seperate something that you previously integrated. But I think you canít easily seperate TeleAtlas from the minds of TomTom management, and future businessmodels.

TeleAtlas also has a lot of relations in the car industry. TomTom tries to strengthen these relations because they want to create in-dash navi systems. So thatís another reason for them to keep TeleAtlas, they need their network.

So I donít believe in selling TeleAtlas. I would find it less difficult to think the other way around. Garmin is a real PND manufacturer. They have their own production plants, produce their own devices, but they donít own any maps. TomTom doesnít own any plants: all production is outsourced, but they do own maps. So they are complementary. A merge or collaboration between these two would be the most fertile. It would save them both a lot of money.

The only problem is that I think they donít like each other. Garmin also did a bid on TeleAtlas, and thatís where TomTom raised their bid, which got them into financial troubles. But if you look at it rationally, it would be a good case for both of them to work together in some form.
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PostPosted: Sun Apr 10, 2011 10:38 am    Post subject: Reply with quote

Realy informative post. Thank you
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PostPosted: Sun Apr 10, 2011 11:51 am    Post subject: Reply with quote

If TT really want to get into the areas you suggest then, in my opinion, they are going about it in a cack-handed way.

If they want to get into "services" they have got to become more service orientated. Their so called "support" was appalling whenever I tried to use it, and was one of the reasons I abandoned their products (the other to follow). I knew more about their products than the person I was emailing! And from what I read on this forum it ain't got a lot better since.

And if they are not concentrating on "black boxes" and are trying to get into the mobile market how come they totally abandoned the Windows Mobile platform 3 years ago, and have never even bothered with the fastest growing platform, Android? So that is my last 2 phones. And I am not alone I suspect.

An interesting decision to invest in them, but not one I would have made, as you may have gathered. Of course only time will tell whether it was the right or wrong one.
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PostPosted: Sun Apr 10, 2011 12:31 pm    Post subject: Reply with quote

peterc10 wrote:
If TT really want to get into the areas you suggest then, in my opinion, they are going about it in a cack-handed way.

If they want to get into "services" they have got to become more service orientated. Their so called "support" was appalling whenever I tried to use it, and was one of the reasons I abandoned their products (the other to follow). I knew more about their products than the person I was emailing! And from what I read on this forum it ain't got a lot better since.

And if they are not concentrating on "black boxes" and are trying to get into the mobile market how come they totally abandoned the Windows Mobile platform 3 years ago, and have never even bothered with the fastest growing platform, Android? So that is my last 2 phones. And I am not alone I suspect.

An interesting decision to invest in them, but not one I would have made, as you may have gathered. Of course only time will tell whether it was the right or wrong one.


It's sad to hear about your service problems. If this is really the case, they should work harder on their services. I won't defend them in any way. I'm just a shareholder trying to gather information.

I have the same question about Android. Why are they available on Iphone (to much satisfaction I read elsewhere) but not on Android? I'm going to ask them on a shareholders meeting at the end of this month.

This is where I have to guess. Some people were speculating Google wanting to buy tomtom, but it didn't work out. I don't know. But if it's true, then creating an app wouldn't have been neccessary, because the maps would be on android phones anyway. Another reason might be that they want to protect their software better, being afraid of more people trying to copy it. And that for some reason they feel better protected on apple platform. Another reason might be, that they're still developing it, and it will be out soon. I just don't know.

Windows mobile is only 3% of the total smartphone marketplace, so I believe that's why tomtom isn't there. But android is much bigger, so I think tomtom should be there.

Apart from this there is a broader definition of what 'services' means. For instance, a new service is that tomtom is now selling traffic information (databases of traffic flows) to governments who are involved in building new infrastructure. So that's a new kindof consulting branche they are setting up.

They also recently opened up a speed camera databse with hundreds of thousands of cameras worldwide. It's available for mobile app developers.
It's just some examples of broader product development.


Last edited by tomtom_shareholder on Sun Apr 10, 2011 1:10 pm; edited 1 time in total
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PostPosted: Sun Apr 10, 2011 12:54 pm    Post subject: Reply with quote

tomtom_shareholder wrote:

It's sad to hear about your service problems. If this is really the case, they should work harder on their services. I won't defend them in any way. I'm just a shareholder trying to gather information.

Don't take my word for it ..... there are plenty of other reports on this forum of not being able to get hold of them and then getting stock answers to question you did not ask, but no answers to the ones you did.

tomtom_shareholder wrote:

Another reason might be, that they're still developing it, and it will be out soon. I just don't know.

They have been asked and have said "no plans". That would be stupid if they did have plans!

tomtom_shareholder wrote:
Windows mobile is only 3% of the total smartphone marketplace, so I believe that's why tomtom isn't there. But android is much bigger, so I think tomtom should be there.

Not sure where you got those figures from! WM used to be the most popular smartphone platform, and still was close to that when TT decided to abandon it (by stealth). Whilst sales went down last year when they announced WM7 would be along "later" and would not be compatible with previous versions there were still plenty of WM6 (and 5) phones being used, and still are. But TT refuse to sell them an up to date app, or even up to date maps for the TT versions they have got! And, by all accounts WM7 is now selling reasonably well, and certainly at a lot higher than 3%!

Good luck with the questions. Let's hope you get more straight talking from them than their customers (existing and potential) do.
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PostPosted: Sun Apr 10, 2011 1:18 pm    Post subject: Reply with quote

That's not really a way to deal with existing customers, is it. Seems like they shifted to iphone instantly, like betting on one horse, and leaving the rest, not even being able to update maps. (could this be something apple negociated?)

I will dive into this and ask them straightforward. I live in Amsterdam (where TT HQ is based) so that might give me some advantage in getting to speak someone to inform me.
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PostPosted: Sun Apr 10, 2011 1:39 pm    Post subject: Reply with quote

And the daft thing is that TT started life as a software developer for the Windows PDA market, which then morphed into the Windows Smartphone market, and they were market leaders in those markets. Then they went into the black box market and became market leaders in that too.

I am sorry to go on, and I am sure others will have different views, but I think TT is a classic example of a market leader getting complacent (or, less politely, too big for their boots). They abandoned their original mobile device software market (or a large part of it) because the black boxes made cheaply in China (or wherever) with their software on made them more money per sale. However with the proliferation of very smart smartphones why would any average user (not us satnav die-hards) with one want to buy a black box when they can buy software from copilot, etc for their shiny new smartphone (or even TT if they have an iphone) much cheaper and only have one gadget to carry around?

A couple of years ago I posted on this forum to say that, with TT's policies, I thought they could get caught in a pincer movement between in-car sat nav systems and smartphones, both of which were then becoming more popular. I have seen nothing since to change that view.
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PostPosted: Sun Apr 10, 2011 3:46 pm    Post subject: Reply with quote

peterc10 wrote:
They abandoned their original mobile device software market (or a large part of it) because the black boxes made cheaply in China (or wherever) with their software on made them more money per sale.

This I believe is both true and untrue. It is true for you, as you were already a user. It is untrue in that sense that with the traditional PND devices (you call them black boxes) navigation has made it's way to the masses, who are not all that computer savvy. For instance my father does have a tomtom in his car, but he's still a bit afraid of a smartphone. It's small for his eyes and in his view it has too many functions.

So in it's time it was a relevant device. And depending on specific needs or preferences it can still be. Obviously things are changing. Smartphone market is growing very rapidly, and already reached the 'late majority' group of consumers. So this means that tomtom has to change it's ways. Strangely enough they have to change back to where they started, as a (partly) software developer. I believe they will become partly hardware, partly software developer, partly mapper and partly traffic consultant (services). So it's a bit of all these things.

This is what they are already doing right now. But, since it's all about profit, they will do it gradually. TomTom stated that they foresee a decrease in PND sales of about 10-15% per year. And that they see growth in all other activities, like mobile, map licencing and so on. They believe that for them this will lead to 'flat revenues'. Which means that decline in PND will be equally high as growth in other activities. For them this is important.

They do want to change, but they can't afford these changes to come with dropping profits. That's what happens when both banks and shareholders are looking over your shoulders. (just like I am). It's the corporate world.

I don't believe in the prediction you made three years ago. The people at tomtom know what they are doing. It's not like they don't see what's happening in the marketplace. But like most companies they sometimes have a wait and see mentality. In a way this is also smart. A few years ago people thought smartphone market would be dominated by Apple's iphone. The rise of Android wasn't anticipated. Or at least not in the numbers that it did. So you have to both alert and agile.
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