TomTom: Why smartphones won't destroy our business

GPS devices going the way of the pay phone? Hardly. According to Tom Murray, TomTom’s senior vice president of market development, there are a number of reasons a portable navigation device trumps the navigation tools on a smartphone. Plus: TomTom’s devices are getting smarter by harnessing data from their users, leading to Wikipedia-like consensus on maps and intelligent routing. I talked to Murray last week.

TomTom now has an iPhone app ($49.99). But since iPhones already have GPS, isn’t that redundant?

If you look at the global market for GPS devices—TomTom, Magellan, Garmin—it’s clear that consumers prefer the approach we’ve taken: turn-by-turn navigation. So we’ve made available to iPhone users the same navigation tool, which is the best in the market, independent of platform. It becomes a question of what the consumer is motivated by and what sort of experience they are hoping to have. If you use the built-in iPhone app, it’s a different quality of maps, different routing process.

With GPS-enabled smartphones, how are stand-alone GPS devices still viable?

This is a question I’ve heard a lot over the last couple months with the advent of Nokia’s approach to navigation. There’s been no market impact on the demand for stand-alone GPS devices. We have sold 40 million devices worldwide. Dedicated portable navigation devices—PNDs—offer a number of advantages:

• Screens: In the PND business, over 80 percent of the devices sold today have 4.3-inch touch screens or bigger. When navigating in the car, the consumer has voted for a larger screen size, versus a 3.5-inch smartphone screen. This allows them to see more of the map and directions on the screen.
• Audio: Despite the importance of screen size, ideally , we want people to be looking out their window when they are driving. So the quality of the audio allows them to listen to clear, loud, spoken instruction. The audio you're getting from smartphones is a little less loud and tinnier.
• On-Board Maps: There is the question of whether the maps are on-board (built into the storage of the device) or off-board (downloaded as you’re navigating). A lot of the smartphones are off-board, downloading in real time, which means you’re subject to a dropped call or roaming charges. For us, it all resides in storage in the device, so even if there’s no cell service, you will have your maps.
• Battery: I use my iPhone to navigate, and turn-by-turn navigation tends to exhaust the battery compared to making phone calls or writing emails. The stand-alone battery lasts three to five hours.
• Mounting: You need a place to mount the phone—it’s not a small issue. One of the principle advantages of a dedicated device is that they all have mounts to attach to your window or dashboard. If you don’t have a similar mount, you need to buy one, or you risk using it in a manner that’s less than ideal.
• Sharability: Most consumers recognize that a portable device is sharable in their household. They tend to use a phone’s navigation as a backup. Or they’ll use it for pedestrian application: They use the PND to get a neighborhood and use their phone to walk to the restaurant.

We continue to add functionality and features. We’ve just launched the XL 350 and XXL 550 series. We’ve simplified the user interface of the product, making sure menus are easy to use. Versions of the XL and XXL come with lifetime maps and lifetime traffic services [for an additional $30 each]. It’s future-proof.

You recently introduced voices of race car drivers. How many words or phrases do they have to record to be able to provide an unlimited number of navigation instructions?

With those voices, they’re not speaking phonetically every sound and every street name. There are 70 recorded navigation instructions. There is programming that allows text-to-speech, so the voices can read anything. We also just introduced Star Wars voices, like Darth Vader.

What is next in the GPS industry? Is there anything beyond directions, traffic warnings and gas stations?

One of the primary challenges in this industry is that the world doesn’t stand still—18 percent of the nation’s road information changes every year. We were buying maps from TeleAtlas and NAVTEQ. The business model is such that the consumer would have to buy a map update. So we introduced TomTom Map Share. If you’re driving along and there’s something missing or incorrect, with a couple taps, you can report the information or make the correction on your own device as an overlay. You can share the change with the TomTom community and download changes others have made. Since 2007 we have gotten over 11 million map corrections. When the Minneapolis bridge fell, within a couple hours, we had a number of user-generated changes that the bridge was no longer there. This also fundamentally changes the way we develop maps. When TeleAtlas and NAVTEQ build maps they have a mobile fleet of mapping vans that traverse roadways. By using the community (not exclusively) we can focus far more of our energy on validating changes. It would take the fleet of TeleAtlas vans 11 years to drive across Europe. It takes about 11 minutes for TomTom users to drive it. In a Wikipedia-type way, we’ve harnessed the power of the community.

We are also building intelligent routing into our devices (IQ Routes Technology). We were developing algorithms that look at the shortest distance between A and B, based on the posted speed limit. It says you will be there in 40 minutes at 60 miles an hour, but in rush hour, it might be 6 miles an hour. So when you buy a TomTom, it’s triggered to ask whether the user is willing to share, anonymously, information to improve navigation. About 90 percent say yes. We now have 4.5 trillion bits of data from our users. You can take that massive data and break it down to time of day and day of the week, so we can give you real information about how long a route will realistically take. It’ll calculate the fastest route, which may be different at different times of day. We’re also using all this data to start working with the automotive industry [to make cars safer]. We aren’t dabbling in this. We are focused on automotive navigation.

Images: TomTom