Growth Matters: TomTom helps you navigate the world

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With all the gloom in the global economy, I got to wondering whether there is anything else going on in the world of business. I'm looking for growth because I think that's what will ultimately bring the economy out of the doldrums. Not surprisingly, that growth is coming from technology companies. In Growth Matters, I look at consumer technology companies that point the way to growth trends -- and in the process introduce services and products you may want to explore.

There has been some amazing progress in using GPS devices to help people get around this wide world in which we live. And one of the companies that has had a big influence in navigation has a funny name -- TomTom. I interviewed TomTom's vice president of market development, Tom Murray, who said, "TomTom is the world's leading navigation solutions provider. TomTom's products are developed with an emphasis on innovation, quality, ease of use, safety and value."

As Murray said, "TomTom's products are all-in-one navigation devices that enable customers to navigate 'right-out-of-the-box' and include:

  • TomTom GO, TomTom XL, TomTom ONE, and TomTom RIDER product lines;
  • TomTom NAVIGATOR software for PDAs and smartphones;
  • TomTom WORK devices that combine industry-leading communication and smart navigation technology with leading-edge tracking and tracing expertise; and
  • The TomTom HOME desktop application that offer a portfolio of content and services."

TomTom generates its revenues from selling products and services through eCommerce and retail channels. According to Murray, "TomTom generates revenue by selling its PND products, accessories, and services through a number of channels, including retail and eCommerce. Additionally, TomTom subsidiary Tele Atlas generates revenue selling premier digital maps to a wide range of GPS/navigation companies."

Unfortunately for TomTom shareholders, those fine products don't translate into profitability (it lost 873 million euros in 2008). That may be due to the high degree of price competition in the market for its PNDs -- which could be forcing TomTom to sell at prices that make it hard to cover costs. But if TomTom can find a way to create premium services that customers will buy, it might be able to dig itself out.

Peter Cohan is president ofPeter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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