Wednesday, January 02, 2013
Following on from its disastrous mapping problems with its iPhone5 product in 2012, industry rumours are rife of Apple bidding to take over Dutch satnav company TomTom.
Forbes has reported TomTom shares climbed 13% in recent weeks with the stock gaining 33% in the past 12 months, valuing TomTom at €906m.
Rabobank analyst Hans Slob said there is a 30% chance a deal will happen. "TomTom needs the cash from Apple, and Apple needs the know-how of TomTom."
TomTom, however, is saying nothing about the deal and issued a "no comment" to an Irish Examiner request for information.
Other reports have said that the deal would be ‘mutually beneficial’ to both companies — so what could Apple hope to gain from the deal?
Speaking from TomTom headquarters in Amsterdam, Peter-Frans Pauwel, one of the company’s founders and directors, says cartography — for the Dutch — is in the blood.
He explains how the nation used the Portuguese to create the world’s first maps for the East India trade, and how TomTom are the first mapping company in the world to "have it all under the one roof — ‘software, services and mapping’."
The company’s HQ, within walking distance of the city’s central station, houses its research and development facility into maps and traffic information. Development has always been at the core of the company; in the 1990s, Mr Pauwel was writing code for the Psion PDA (personal digital assistant) of which mapping was one of the features. However with limited memory, no GPS (global positioning satellite) and clunky operation, mapping was still at its early stages,
"Devices then were not user-friendly back then, blue collar workers found them to be unmanageable and we realised it had to be simple."
Other factors lead to changes in fortune for the company, according to Mr Pauwel.
In 2000, with the success of digital devices, flash memory of up to one gigabyte became available, and Bill Clinton, then US president opened up the sky and made GPS available to commercial interests.
TomTom saw its revenues rocket from €2m in 2000 to €9m in 2002. At this stage the company was generating most of their revenue from mapping so they focused on that.
TomTom then stripped out the PDA to focus on a single device "to do one thing — take you from A to B".
With revenues jumping to €40m in 2003, the company produced their first hardware, the TomTom Go, to see revenue increase fivefold to €200m in 2004 and to €720 a year later.
An IPO in 2005 allowed TomTom to diversify "and deepen the game plan," said Mr Pauwel.
They acquired a tracking and tracing company from Germany, tracking through mobile phones which was "unconventional but provided a good incorporation of technologies — because now you know the speed. And that is providing more feedback from our devices."
TomTom gets feedback from over 99% of the devices out there which provide real-time information, more data from the speed of the traffic to the picture of congestion. Mr Pauwel says it was "like discovering a whole new world".
The company gathers real-time anonymous information from users on motorways, busy roads, an elsewhere. They encourage all users to switch on the ‘go live’ device even if they know the route so data can be gathered.
With 50m TomTom users sharing info with more than 80m mobile phones, it builds up what the company call the ‘best HD traffic service in the world’. So if there is a route around the traffic, the system will find it and provide it with accurate arrival times to give "stress-free motoring".
"Google wants to know who you are and where you are to make ads more relevant," said Mr Pauwel. "However, we are working with both national and local governments to bring improvement to society. Driving is a matter of life and death."
Integrating mapping into cars can also promote fuel saving; using ascent/descent fuel efficiency, it could be used in electric cars to reduce "range anxiety". However, the HD live traffic service from TomTom can already lead to savings in journey time and fuel use by redirecting traffic on less busier routes through major urban areas. The company have set out to "cut traffic congestion around the world".
Eszter Pattantyus is vice president of maps. She said that 80% of applications sold today have a location element.
"TomTom sells maps to more than 700 customers from games companies to governments."
She says that they have a unique approach to mapping incorporating field surveys; mobile mapping and a ‘probe and put’ exercise which sees community feedback on where change is happening.
"Traffic management is traditionally done by government from the top down," says Carlo van der Weijer, a transport system specialist at TomTom’s traffic centre. "But the information economy changes this, and 99.2% of TomTom users respond positively to Mapshare to improve the system.
"Our objective is to get people from A to B with less stress, in more safety and more quickly. Already we have saved thousands of lives throughout the EU with this technology."