Tom Tom Lost As Demand For Their Navigation Systems Tank + Smartwatch Fails To Sell

Written by David Richards     14/02/2015 | 17:22 | Category: NAVIGATION

As demand for standalone navigation devices start to tank Dutch Company TomTom is struggling to deliver growth in a category that some analysts claim has "no future" as consumers move to build in navigation in cars and trucks while using smartphone navigation services.

Tom Tom Lost As Demand For Their Navigation Systems Tank + Smartwatch Fails To Sell
One Company that has hurt TomTom sales is Google who has steadily improved their navigation offering to the point that it is" now significantly superior to what Tom Tom is trying to cram into a small screen".

The company who has report a fall in both sales and profits last week is facing rampant decline in demand, Australian retail sales of navigation devices have fallen 22%, US sales fell  23 percent to 4 million units in 2014, In 2013 demand fell 26 percent so the current falls are on top of big falls in 2013 and 2014. 

TomTom said in reporting its fourth-quarter financial results. 

PNDs face competition from factory-installed car-navigation systems and smartphone navigation apps, and PND suppliers such as Tom Tom are diversifying into GPS-equipped sports watches but with little success.

Retailers that ChannelNews has spoken to said that Tom Tom has a bleak future in the smart watch space due to new models from Companies like Apple, Samsung, Alcatel, LG and shortly several well-known watch brands. All of the new smartphone linked smartwatches will be capable of delivering navigation and other services. 

TomTom also said PND sales are falling faster in North America than in Europe, where full-year industrywide sales were off 9 percent to 7.7 million in the USA.

TomTom said its share of retail PND sales slipped to 13 percent in the quarter from a year-ago 15 percent. For the full year, 

TomTom's share slipped to 15 percent from 17 percent. In the quarter, TomTom's US sales fell 17 percent.

The company's global sales fell 3 percent in the quarter to $A378M and fell 1 percent for the year to $A1.394 Billion

Net income fell in the quarter to $A686, 000 from a year-ago $4.70 Million.

The company has recently tried to make inroads into built-in car navigation systems but that market is dominated by Nokia, Google and Apple who now dominate in the smartphone and tablet based mapping business.

"TomTom is too small make these huge map investments on its own, especially given the rat race with mapping giants Google and Nokia," Hans Slob, analyst at Rabobank said.

The company said it expects profit to decline in 2014 by 6%.

Another problem for Tom Tom is that they have had limited success in gaining a foothold in the auto install automotive market. This unit generated about 20% of revenue in 2013.

"In the automotive market, things take a long time, it will take until 2015 before we start to see strong revenue growth coming through," said Harold Goddijn, the company's long-term chief executive.

Mr. Goodijn is tweaking that strategy now, steering away from complete systems for the in-car market, and instead focusing on selling separate components, like maps, traffic services or navigation software.

TomTom also has introduced other consumer products to diversify away from satnav kit, like a GPS-equipped sports watch. But those devices have had a limited impact on earnings. The watch, launched last year, currently makes up just a few percent of revenue, chief financial officer Marina Wyatt said.