TomTom 2013 Annual Report Download - page 4

Our strategy
TomTom operates in four different market segments: Consumer,
Automotive, Licensing and fleet management (Business Solutions).
In the Consumer market, our strategy is to maximise value from the
portable navigation device (PND) category and to diversify in other
product categories that have a natural fit with our brand,
distribution and product design capabilities.
In the Automotive segment, we are positioning ourselves as a
leading vendor of navigation software and services for the
connected and automated car.
In the Licensing segment, which includes mobile device vendors
and internet service providers, we are working with existing
customers to deepen our current business and are targeting new
potential customers with location-based applications and a need
for licensing terms consistent with their customer approach and
business model.
In fleet management (Business Solutions), we achieved market
leadership in Europe and our strategy is to continue to grow
through a combination of organic growth and targeted
acquisitions.
Consumer business
Our European PND business held up well in 2013 and we gained
market share. Although we sacrifice recurring revenues, we believe
our decisions to bundle map updates and traffic were well judged.
We successfully introduced our new navigation software at the high
end of our range. In Europe we enjoyed an increase in market share
and a slightly higher average selling price (ASP) for PNDs. North
America remains a challenging market for our PNDs. We will
introduce the new range there in early 2014. During 2014, we will
complete the rationalisation of the entire PND range onto our new
PND software platform, which will benefit further from our
continuously improving navigation software.
In 2013, we successfully introduced a range of GPS sports watches
under our own brand, representing the beginning of a significant
diversification in our consumer products. In 2014, we will further
improve and expand the sports watch range.
We are exploring new product categories on the basis of a fit with
our brand and with our capabilities.
Automotive and Licensing business
Although we will continue to manufacture previously developed in-
dash hardware for Renault, Mazda, Fiat, and Toyota, when quoting
for automotive contracts, our strategy is now to offer a coherent
set of navigation software components. This strategy positions us
as a partner to 'tier 1' in-dash system vendors.
We offer individual CNS (connected navigation system)
components, such as maps, traffic services and navigation
software, as well as a complete pre-integrated connected
navigation system. Next to offering our maps in the industry-
standard NDS (navigation data standard) map format, we are now
investing in using that NDS map format in our own server-side and
device-side software. In combination with our real-time map
update system, this will keep the 'on-board' NDS map up-to-date
on a continuous basis.
Our strategy of licensing class-leading software components and
services has been well received by Automotive OEMs (Original
Equipment Manufacturers) and in-dash system vendors. We believe
we are on the right track and are investing to execute on it. It will
take time before we see revenues attributable to our new products.
The priority in 2014 is to effectively market our products, including
demonstrating working NDS-based navigation software, to secure
partnerships, and to win deals for new custom in-dash systems.
We have a leadership position with our real-time traffic service
which is now available also as an independent component. In 2013,
we announced deals to supply our traffic streaming service to
Toyota and Daimler and we announced a partnership agreement
with Total Traffic + Weather Network (TTWN) in North America.
This agreement combines our real-time and predictive traffic flow
data with TTWN’s incident, construction and congestion data to
create the most comprehensive traffic product available in North
America. The combined data offering will be available across
multiple platforms, including radio, television, automotive, online
and mobile. We extended our coverage beyond Europe and North
America into Brazil and our service has gone live in China at the
beginning of 2014.
Fleet management business
Our fleet management business grew strongly in 2013. This was
achieved by a combination of solid organic growth and the
acquisition of Coordina, the Spanish market leader in fleet
management. The integration of Coordina has gone well, adding
27,000 subscriptions to reach an active installed base of 330,000
vehicle subscriptions.
The underlying industry dynamics for our fleet management
business remain favourable. A combination of short return on
investment for our customers and an under-penetrated and highly
fragmented market allow us to plan for long-term double-digit
growth of our revenue.
Technology
Our reorganisation into product units has helped us to increase R&D
effectiveness. Product roadmap decisions are made principally
within these product units where there is an in-depth
CEO Letter
ANNUAL REPORT AND ACCOUNTS 2013 / 4