TomTom 2005 Annual Report Download - page 16

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฀ ฀Careful฀evaluation฀and฀pursuit฀of฀strategic฀
opportunities.฀We฀may฀selectively฀pursue฀opportunities฀
to฀engage฀in฀strategic฀transactions฀with,฀or฀make฀
significant฀investments฀in,฀businesses,฀products฀and฀
technologies฀that฀complement฀our฀business฀and฀
growth฀strategy.
Last฀year฀was฀the฀year฀that฀the฀consumer฀mass฀market฀
for฀portable฀in-car฀navigation฀really฀took฀off.฀TomTom฀
led฀the฀growth฀of฀the฀market฀with฀the฀success฀of฀the฀
TomTom฀GO฀range฀of฀products.฀Our฀performance฀in฀
2005฀was฀exceptionally฀strong฀both฀in฀terms฀of฀revenue฀฀
growth฀and฀profitability.฀Revenues฀increased฀nearly฀four-
fold฀to฀

720฀million.฀Volumes฀of฀integrated฀units฀grew฀
nearly฀sevenfold฀and฀our฀net฀profit฀increased฀more฀than฀
five-fold฀to฀

143฀million฀from฀

28฀million฀in฀2004.฀
TomTom’s฀results฀in฀terms฀of฀our฀revenue฀growth,฀our฀
strong฀margins,฀and฀our฀leading฀market฀position฀are฀proof฀
that฀our฀strategy฀is฀working.
Given฀the฀substantial฀size฀of฀the฀market฀and฀the฀current฀
high฀demand฀for฀TomTom’s฀products,฀we฀expect฀to฀see฀
continued฀growth.฀Revenue฀will฀also฀be฀lifted฀by฀the฀
gradual฀enlargement฀of฀the฀market฀within฀Europe฀and฀
North฀America.฀The฀favourable฀market฀conditions,฀
however,฀will฀inevitably฀attract฀more฀competition.฀
We฀will฀continue฀to฀deliver฀a฀broad฀range฀of฀innovative฀
products,฀with฀a฀focus฀on฀high฀quality฀and฀ease฀of฀use.฀
These฀products฀will฀be฀supported฀by฀investment฀in฀the฀
TomTom฀brand฀and฀by฀a฀strong฀presence฀in฀retail฀across฀
the฀markets฀in฀which฀we฀operate.
Barring฀unforeseen฀circumstances,฀revenue฀and฀profits฀
are฀expected฀to฀increase฀in฀2006.
฀฀฀฀฀฀
Operational฀review
TomTom’s฀products฀meet฀a฀basic฀human฀need:฀knowing฀
where฀you฀are฀and฀how฀to฀get฀to฀where฀you฀want฀to฀go.฀
This฀is฀all฀the฀more฀important฀for฀car฀drivers,฀who฀must฀
negotiate฀traffic฀as฀well฀as฀navigate.฀Navigating฀outside฀a฀
familiar฀area฀quickly฀leads฀to฀uncertainty.฀Good฀navigation฀
products฀overcome฀this฀by฀providing฀fast,฀clear฀
information฀that฀increases฀both฀the฀sense฀and฀the฀actual฀
level฀of฀safety.฀Most฀drivers฀appreciate฀the฀benefits฀of฀
navigation฀systems.฀However฀the฀expense฀and฀
complexity฀of฀factory-installed฀and฀dealer฀fitted฀navigation฀
systems฀often฀discourage฀drivers฀from฀buying฀one฀of฀
these฀products.฀Our฀product฀range฀is฀affordable฀and฀easy฀
to฀use฀and฀is฀helping฀to฀open฀up฀the฀mass฀market฀to฀
navigation฀devices.฀Our฀products฀can฀be฀bought฀in฀stores,฀
used฀by฀everyone฀straight฀from฀the฀box฀and฀what’s฀more฀
the฀decision฀to฀buy฀does฀not฀depend฀on฀the฀purchase฀of฀
a฀new฀car.฀Our฀products฀also฀typically฀cost฀far฀less฀than฀
factory฀or฀dealer฀fitted฀equipment฀while฀providing฀a฀highly฀
reliable,฀fun฀and฀easy฀to฀use฀experience.
Markets
We฀divide฀the฀market฀for฀satellite฀navigation฀products฀
into฀four฀segments:฀
•
฀ ฀
Factory-installed฀navigation฀systems
฀-฀satellite฀
navigation฀systems฀that฀are฀factory-installed฀as฀a฀fixed฀
device฀in฀vehicles฀by฀manufacturers;฀
•
฀ ฀
Dealer-fitted฀navigation฀systems
฀-฀satellite฀navigation฀
systems฀that฀are฀fitted฀in฀vehicles฀as฀a฀fixed฀device฀
after฀the฀vehicle฀sale฀by฀dealers,฀garages฀or฀other฀
professional฀installers;฀
•
฀ ฀
Portable฀navigation฀devices
฀-฀satellite฀navigation฀
products฀that฀are฀portable,฀and฀fit฀for฀purpose฀such฀as฀
the฀TomTom฀GO,฀TomTom฀
ONE
฀and฀TomTom฀RIDER;฀
and
•
฀฀
Navigation฀solutions฀for฀PDAs฀and฀smartphones
฀-฀
such฀as฀TomTom฀NAVIGATOR฀software฀for฀PDAs฀and฀
TomTom฀MOBILE฀software฀for฀smartphones.
We฀are฀focused฀on฀the฀third฀and฀fourth฀of฀these฀
segments.฀We฀believe฀that฀they฀have฀overtaken฀the฀other฀
two฀segments฀as฀the฀products฀in฀these฀other฀segments฀
are฀more฀expensive,฀non-portable฀and฀often฀have฀dated฀
technology฀or฀require฀time฀consuming฀and฀inconvenient฀
professional฀installation.