TomTom is based out of Amsterdam, has 3,500 employees, and sells products in over 40 countries. The company offers a variety of electronic navigation products that operate using Global Positioning System (GPS) data. Its lineup includes the GO series of portable and automotive navigation devices, some of which are designed with built-in wireless calling capability. TomTom's software enables navigation functions in PDAs, vehicle-based navigation systems, and wireless handsets. The company markets its products through retailers and distributors worldwide. TomTom makes more than two-thirds of its sales in Europe. 
Founded in 1991, TomTom has grown into the industry leader for navigation devices and services. TomTom started as a company whose focus was on creating software for mobile devices. The original software was for business purposes. They produced many applications such as: a bar code reader and a program that allowed for orders to be entered into a company’s system using only a mobile device. Then, by 1998, TomTom had moved into the consumer market with a program called EnRoute. It was software that was able to give consumers a way to see a map of where they were going while they were driving. As technology was developing to allow for more accurate GPS mapping, TomTom was there to make a move. In 2002, they released their first navigation product for PDAs. This new product was released in Europe; it gave drivers the ability to have a fully functioning navigation system without having to spend as much as those who previously only could get their navigation systems preinstalled in the car. 2004 brought about the changes to TomTom that we know today. They developed and released their first stand alone portable navigation device.
TomTom (TOM2) shares are trading on Euronext with the volume of 1,397,630.
TomTom operated better in 2007, and declined to negative earning in 2008, and then recovered a little bit since 2009.  Some financial reporters blamed this situation to the economic downturn and emerging of strong rivals in the industry. Smartphones had become a strong rival to PND, consumer trend had changed over time, and the PND market is not as lucrative as it was years ago. In 2009, TomTom brought its cost base into line with the changed macro economic conditions and reduced operating expenses compared to 2008, and in 2010, TomTom tended to focus more on content & services, and realized the only way to remain in the top of the market, it has to innovate through the web world and invent faster and more attractive products. During year 2010, the revenue from business solution unit had increased due to the increased sales in WEBFLEET and online services.
|TomTom Group||reported (€ millions)||percent revenue||reported (€ millions)||percent revenue|
|Content & Services||357||23%||305||21%|
In 2010, TomTom broadened the revenue mix, and the total revenue increased by 3% from €1,480 million in 2009 to €1,521 million in 2010. Revenues from Content&Services increased from 21% in 2009 to 23% in 2010; the increases were mainly the results from the increased service revenue in the Consumer business unit and higher WEBFLEET subscriptions in the Business Solutions business unit. Consumer revenue earned from increased sales of subscriptions and LIVE Services; however, consumer hardware revenue decreased because of lower Portable Navigation Devices (PND) unit sales along with the reduction of market size and a decline in average selling price (ASP). TomTom try to strengthen the ASP by increasing the service level and adding extra features.
Automotive revenue increased from 7% in 2009 to 12% in 2010, TomTom sold 584,000 in-dash navigation and car systems in 2010 compared with 260,000 in 2009. The increased volume shipments to Renault and sales to Fiat, Sony, and Toyota caused the 5% rise in automotive revenue. TomTom focused more on research and development (R&D) activities and marketing spend in 2010, and EBIT was 18% lower at €190 million in 2010 as the result of these investments; however, the net result increased by €16 million, a 17% rise over 2009.
Products with Live services offer the highest quality and most up –to-date real time services, such as HD traffic, speed camera information and local search.
Tomtom total PND customer base grew to 50 million. 
Selling products and services in 37 countries.
48% market share in the European market and 27% market share in the North America.
Tomtom has a successful mobile navigation application; Tomtom app is one of the biggest selling products in the apple app store, with 0.5 million downloads.
A unique partnership with Nike to deliver a game-changing products for runners.
Continuous automotive expansion of relationship with Renault, Fiat and Toyota, also BMW, GM and ford.
Map database has become the most comprehensive available on the market, covering 12 more countries and five million kilometers of routable roads more than the nearest competitor; also with 40 countries map up-to-data.
Tomtom’s supply chain and distribution model is outsourced, increasing the ability to scale up or down the supply chain, and flexible to develop new products.
High operating expense, overall operating expense in 2010 increased by €54 million to €554 million from €500 million in 2009, primarily caused by the increased investment in research and development as well as in marketing. 
TomTom has less resources compare with the current competitors.
Has limited suppliers, many innovative products in the market in TomTom’s devices are only available from specific leading technology organizations.
Potential growth to 30% penetration rate in Europe and north America.
The increasing demand for Real-time services.
Potential <5% penetration rate in india and Brazil.
The strengthening of the US dollar against the euro in 2010: on average, the US dollar rate appreciated 4% compared to 2009 which decreased the gross margin for 2010 by 1 percent point.
Many of the current and potential future competitors have greater financial technical and human resources; they may have greater ability to fund product research and development and capitalized on potential market opportunities.
The shift toward navigation solutions on mobile phones and away from PNDs negatively affect tomtom’s PND market size and profitability.
Expected a 15% sales decline in the overall PND market.
New entry - high-collie
Now the information required to create digital map databases is available through public resources, and with the developed technology of collecting data, it enables the potential entrants to enter the market with reliable map databases.
Buyer - high
Buyers now have varieties of different devices to reach the destination, apart from the PNDs, they also could obtain the trip information by the use of smartphones or anyplace with public internet.
Supplier – high
TomTom’ supply chain and distribution model is outsourced, it depends on limited number of third parties. Many innovative products in the market in our devices are only available from specific leading technology organisations.
Substitutes - high
A shift towards the Navigation solution on mobile phones and away from PNDs
Products using “off-board” technology
Built-in automotive system
Rivalry of the competitors - high
Tomtom is facing increasing competition from smart phones which all of them offer similar services, also tomtom facing the compositing with maps, services and built-in systems in cars with others. 
TomTom NV was founded in 1991, but released its very first navigator product, TomTom Navigator, in 2002. After that, TomTom had been one of a well-known manufacturer of automotive navigation systems, including stand-alone units and software for personal digital assistants and mobile telephones. In general, most of the models share the similar hardware, except the ones with FM transmission, Bluetooth, hands-free calling, and enhanced positioning technology, but every model applies a different software system. Users are able to download the newest software system on the old devices. TomTom offers three types of products, navigation devices, in-dashboard navigation and car control services and navigation software for installation on mobile devices.
|Product Name||Price Range |
Navigation devices and portable devices are referred to as units; after installing the software system, the devices can provide “bird’s eye view” of the road and direct-overhead map view. The navigation uses a GPS receiver to display the precise location and provide visual and spoken directions in order to guide users to destinations. The newest unit products include, GO, Via, XL, and Start. GO models have all-in-one GPS navigation devices with fluid touch screens, speakers, USB ports, internal Lithium ion battery, and TomTom HOME software. Most of the GO models obtain Bluetooth which allows connection to a smartphone for making and receiving calls. Via models have mobile speed cameras, which warn the drivers about speed or other alerts cameras, hands-free calling, which provides a service of making and receiving calls without physical dialing, and Local Search with Google and weather reports. Both GO and Via use HD traffic technology, which is a traffic monitoring service that provides traffic information from sources of governmental/third party data such as induction loops in roads, cameras and traffic surveillance and sources of traffic flow of anonymous mobile phone users. XL models have advance lane guidance, map share technology, which allows users to make corrections on their maps and share them with others, LIVE snapshot, which displays information about cameras, traffic conditions, and fuel prices. Start models share similar functions with XL. Both XL and Start use IQ Routes technology, which is a similar technology with HD Traffic, but without governmental/third party data.
In-dashboard navigation and car control services are mainly for automotive market. The navigation devices are built on dashboards in the cars; products include Renault’s Carminat TomTom with TomTom HOME software, Fiat and Alfa Romeo’s Blue&Me TomTom with IQ Routes technology and steering wheel control, Toyota Aygo Connect Multimedia hands-free calling and iPod connectivity, and Sony XNV Series with HD Traffic, mobile speed cameras, Local Search with Google, and high solution touch screen. TomTom also has Rider models as the bike navigations, featuring with wireless headsets, glove-friendly screen, and advanced lane guidance.
Navigation software for installation on mobile devices includes TomTom HOME, which is a PC application that allows synchronization/updates to be sent to the mobile device, TomTom Mobile, which is navigation software for several mobile phones, and the newest released software for iPhones, and Navigator 7 for Windows smartphones. Also, TomTom had released Nike+ SportWatch GPS with ultimate tracker, which tracks the time, distance, heart rare and calories and personal coach, which reminds the time to run, stores running history and personal records.
From the picture to the left it can be seen that Europe has the largest number of vehicles on the road - 321 million. In second place is North America with 268 million cars, followed by India with 32 million and Brazil with 22 million. This data helps analysts predict global growth opportunities of 30% penetration rate in Europe and North America and less than 5% in India and Brazil.
A main segment for the company is its business with automotive companies. Tomtom provides automotive manufacturers and their suppliers with location and navigation solutions. In 2010, TomTom grew their business in Europe by increasing its market share from 10% to 16%. This was the result of their new formed relationship with Renault, Fiat and Toyota. In 2010, TomTom also entered into a partnership with Macda for the new Mazda5 and Sony. From 2009 to 2010, TomToom’s Automotive industry sales increase by 20%.  The joint venture with AutoNavi, which is the leader provider of digital map and navigation content in China, positioned them as the world’s fastest growing automotive market.
This is the largest segment and is focused on developing navigation products and real time services for consumers on PNDs, mobile phones and via the Internet. The total number of PND customers has reached 50 million users and they are expanded into Morocco, China, Malasya dn Singapore. The business started selling its products and services and became available in 37 countries worldwide. In 2010, TomTom took 48% of the market share in Europe and 27% of that in North America.  The TomTom application for the iPhone continues to be one of the biggest selling products in the Apple App Store with close to half a million downloads in the past year.
Also, TomTom has announced a new product, a GPS sport watch that was developed in partnership with Nike. This is their first product in the fast-growing sports and fitness market. This product has so far helped both companies to strengthen their position in the market.
TomTom has a Licensing Segment that sells their maps, navigation content, and internet organizations to smart phone manufacturers, mobile application developers, governments and enterprises. Community input is now used to update TomTom maps in 40 countries worldwide. Their maps are rated as extremely high quality and in some cases up to 10% more accurate than alternative maps.
The Business Solutions Segment is a leading provider of fleet management systems, navigation products and smart solutions for reducing financial and environmental costs for commercial fleet in Europe and North America. This segment is experiencing a massive growth of 39% per year.  The TomTom ecoPLUS device provides an application called WEBFLEET that takes data directly from the vehicle and gives a measurement of fuel efficiency and carbon footprint. This service is currently active in 18 different countries and the company is already working in ways to improve this service in order to attract more customers and further expand and grow the business.
TomTom competes in several different industries. They include: 
TomTom develops the computer software and hardware that go to companies in order for those companies to keep track of their deliveries. It must make a product that is the quickest to respond and most reliable in order to keep their customers happy. TomTom also produces handheld computers that can be used by delivery company’s drivers. The drivers are able to stay on track with where they are trying to deliver to. It gives the drivers turn by turn directions and also a map. Last, TomTom makes a product that allows for easy communication between a company and its fleet of trucks. The TomTom LINK 300 uses your PC as a way to keep your office connected with all trucks that are out on the road. TomTom also has developed a system that allows companies to follow and log how their drivers are spending their time. The Remote LINK can be used by the drivers in order to log their hours spent driving, resting, or even broken down. This is a good and accurate way to keep track of the hours that you, as a company, need to pay your drivers.
The US economy heavily influences business spending for software products. The success of programming companies depends heavily on strong technical expertise. The success of packaged-software companies depends on technical expertise and good marketing. Small software companies compete mainly by developing packaged products in small niches or producing custom products for individuals. Many small companies form alliances with larger ones to market their products. The packaged software industry is capital-intensive. The custom programming industry is relatively labor-intensive.
Demand often depends on the income of consumers or the profitability of business customers, because many technology products and services are expensive. The profitability of individual companies is driven by their ability to develop and market new products. Large companies often have advantages in access to capital and marketing. Small companies can compete successfully if they have expertise in a particular field of knowledge.
Furthermore, the industry depends highly on demand from the computer industry and makers of telecommunications products such as cell phones, which can vary sharply from year to year. Companies can be successful producing standard parts at low cost or by producing highly specialized components. Small companies can compete effectively with large ones by producing specialized products or developing new applications. Technological expertise is extremely important.
TomTom is not alone in their wanting to move their products into a more advanced stage. Their competition is also working on trying to create navigation products that are faster, smaller, more detailed, and more inclusive. However, unlike TomTom, most of their competition varies throughout the different industries that TomTom works in. The competition in navigation devices is different from that in the software and hardware products. While TomTom may be the most diverse, most of the sectors that they do business in have a positive future for them. The world, as a whole, is always moving toward a more technological society. This puts TomTom, as well as their competition, at the forefront to make decisions that will make them the leader. The ability to come out with the newest or fastest can give anyone the ability to make a quick jump to the top of the industry.
TomTom has over 15 competitors, however, the 3 major ones are Garmin, MiTAC, and Navico.
Garmin The company manufactures navigation products that use Global Positioning System (GPS) technology to wirelessly deliver geographic location data through satellite communications. Its portable products incorporate electronic maps and navigational charts. Garmin also makes communications devices that combine cellular and GPS technology. Boat maker Ranger and Piper Aircraft incorporate Garmin equipment into their products. The company sells its consumer products through retailers including Bass Pro Shops, Best Buy, and Wal-Mart. Garmin gets around two-thirds of its sales in North America.
MiTAC MiTAC International designs, manufactures, sells, and services consumer and enterprise electronics products for leading vendors, such as Dell and SYNNEX. The company makes desktop computers, servers, barebones workstations, handheld and in-car global positioning systems (GPS), data storage systems, handheld computers, handsets, mobile entertainment devices, and wireless networking cards. In addition to customary contract manufacturing services, MiTAC offers tooling, warehousing, and supply chain management services. About two-thirds of sales come from exports to international customers.
Navico The company reels in anglers with its high-tech fish finders and keeps hikers and hunters on the right track with its portable location finders. Navico is a leading maker of sonar products (aka depth sounders or depth finders) for sport fishing. It also makes Global Positioning System (GPS) products used by boaters, hunters, hikers, and others for terrain mapping and marking. The products, sold under its B&G, Eagle, Northstar, Lowrance, and Simrad brands, are distributed through wholesalers, boat dealers, and retail outlets like Wal-Mart. Navico was created in 2006 with the combination of Simrad Yachting and Lowrance Electronics.
Each company operates in a different set of industries, with a few overlapping ones. For example, all three compete in broadcast network equipment as well as computer software. Garmin is the most similar to TomTom out of the three because of how similar the two companies are which makes them perfect substitutes for each other.
|Company Name||TomTom ||Garmin ||MiTac |
|Company Type||Public (Euronext Amsterdam: TOM2)||Public (NASDAQ (GS): GRMN)||Public (Taiwan: 2315)|
|2010 Sales (mil.)||£1,331.3||£1,738.8||£1,234.1|
|1-Year Sales Growth||(10.1%)||(8.7%)||(0.3%)|
|2010 Net Income (mil.)||£77.7||£377.9||£5.6|
Looking at the financial data above, it can be seen how closely the companies are to each other in the business race. Even though the three companies recorded close amounts of sales, the one who came on top in 2010 was Garmin. Also, it is important to note that all three companies recorded a decline in sales for 2010 which is a byproduct of the downturn in the economy and also indicates the state of the industry during that period.
TomTom has a total of 3,500 employees worldwide. They are really diverse, a main characteristic that the company believes made it successful. The company’s culture is the passion for people. Work at TomTom is centered on four core values: open spirit, passion for results, innovative thinking and customer driven. Their core values are at the heart of TomTom’s talent acquisition, talent management, retention and compensation strategies.
Employee Talent Management
This strategy was implemented in 2010  and its key objectives are:
This program also contains a Talent Board which helps in assisting in the development of succession plans and making key investment decisions. These investments are the main key that help TomTom in the creation and delivering leadership programs for their commercial and technology team worldwide.
Their management used a team specific engagement surveys as a way in getting feedback from their employees in order to improve the working environment. The results of the surveys had a big impact on decisions such as improving its management action plans, training, remuneration and workload.
TomTom employees are very diverse and they are geographically spread. In 2010, its management was considering increasing the number of engineers worldwide. By the end of the year, 60% of their employees-engineers were relocated outside the Netherlands.
Their compensation plan is a mix of base salary and performance-related bonus plus a long-term incentive for certain employees in mission critical roles. Their main goal is to keep its employees motivated by having the opportunity of compensation and benefit packages. The company introduced a uniform job matrix for the company called “global grading” which compares all roles at TomTom internally and externally by providing a cohesion between employment positions in different business units.
In 2009, the company presented a new performance-related bonus plan which played significant role in each employee compensation. This program links company’s’ performance to its individual employee performance and created a bonus pool. The bonus percentage depends on the level of influence of each employees position. In addition to this bonus plan, they also provide individual, role-specific bonuses as an incentive for certain employees.
In addition to the compensation package and base salary, the company also provides benefits for their employees in terms of pension, health and disability cover. Also, depending on the local circumstances, they provide some additional benefits in certain countries.
TomTom’s Corporate Social Responsibility(CSR) strategy focuses on the: social and environmental impact, compliance and community. This is important for the company as more consumers become increasingly more concerned with environmental issues. Also, GPS can be a distraction while driving, which is the reason why the company pays attention to responsible driving and safety.
Social and Environmental Impact
TomTom tries to help reduce C02 emissions in the environment and minimize the negative effects that they cause to the environment by setting up their navigation system on reaching destination quicker and displaying more efficient routes. They have made a research on this topic and found that drivers who use their solutions reduced their journey times by 15%.  They believe that if 10% of all the drivers were going to use their HD Traffic device, they would’ve reduce the time spent in traffic by 5%. They also have made their devices so they are recyclable.
Their LIVE Service bundle is up-to-date and clearly displays information to drivers on things such as speed limit, congestion, alternative routes etc. Drivers are also able to see the latest changes in the road network and their ride become and overall safe driving experience. Throught their fleet management business unit they also help fleets drive more responsibly like reducing the likelihood that a truck are routined along small rural roads or obstructed by a low bridge. With their ecoPLUS program, companies are able to get a real view of the efficiency of every vehicle and that way monitor the C02 emission they are making in the air.
According to years of researches, it is a fact that driving with a TomTom navigation device is safer because of the reduced stress and distractions along the road. Also, shorter travel times reduces the possibility of getting into an accident. Their options like guiding the driver into the correct lane when planning to make a turn, their intuitive user interface and providing a live traffic information helps the driver be more aware of its surroundings. All of their devices have an emergency menu called Help Me! which provides an advanced lane guidance and voice command and control features.
Supply Chain Management
TomTom requires their partners through the supply chain to comply with their Ethical Trading Code of Practice. They expect from their suppliers to be provided with products and services that are in accordance with the relevant legislations like Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Directive, the Restriction of Hazardous Substances Directive and the Waste Electrical and Electronic Equipment Directive.