September 30, 2008

TomTom Map Subscription Service - Residual Income from PND's

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Making a bold move forward, TomTom is essentially launching a map subscription service with quarterly updates, it was announced today by TomTom and can be read about at GPSBusiness News. Like the Navigon FreshMaps service that offers quarterly updates with NAVTEQ data, TomTom is now starting to offer quarterly updates with its TeleAtlas data. (Humm, if TomTom is doing this, and Navigon is using NAVTEQ quarterly updates, then the barrier for Garmin may just be internal, and you've got to wonder that if this is a lucrative idea, they will bust it down and bring it to market too.)

Blades and Razors
If you follow the blades and razor approach that Gillette uses, you start thinking about the hardware as the entry point and the maps as the money maker. When you start to consider that these units are now starting to ship with ultra thin profit margins the idea of selling a map subscription may effectively double the profit per unit given enough time. Big opportunity to get residual income from your installed base too. That 3 year old TomTom ONE is dead to TomTom unless they can sell it maps, and maybe a map subscription at that.

Garmin is starting to use small ads on their devices that are delivered through the TMC data feed from NAVTEQ traffic. When I used the new Garmin Nuvi 755T, I thought the ads were a decent trade-off for the free traffic service that comes with the unit as a result.

I tell you, with the markets fast approaching saturation (in Europe at least), the GPS makers are going to have to strive for something to keep the business models afloat, and grabbing an income stream after the sale could be big when you have millions units out there.

Thanks Jim for sending this in.

Read More in: Garmin GPS News | Mapping News | TomTom GPS News

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Posted by Scott Martin at September 30, 2008 9:32 PM

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