TomTom: New Competition Everywhere!

TomTom, an Amsterdam-based company that provides navigation services and devices, leads the navigation systems market in Europe and is second in the US. Its most popular products include TomTom Go and TomTom One for cars, TomTom Rider for bikes, TomTom Navigator (digital maps), and TomTom for iPhone – its most recent release. The company attributes its market leadership to its technology, large customer base, distribution power, and prominent brand image. But as the US and European personal navigation device market becomes saturated, TomTom’s sales growth rate declines. The company also faces increasing competition from other platforms using GPS technology like cell phones and smartphones with built-in navigation functions. Legal and environmental restrictions on the digital navigation industry make TomTom’s future even more uncertain. TomTom responded to these threats by shifting its business mix toward value-added services, making its personal navigation devices a smaller portion of total revenue. Whether the company can recapture significant growth may well depend on whether this shift will succeed.