Seven changes for TomTom to implement in order to turn things around: An open letter to TomTom’s Management Board Members

Harold Goddjin (CEO)

Marina Wyatt (CEO)

Alain De Taeye (Board Member)

 

Dear Harold

 

Three years ago, while visiting Austin, Texas, I purchased a PNA (Personal Navigation Assistant) from TomTom at Fry’s Electronics.  Although my PNA works perfectly, major software and hardware improvements should have been considered prior to production of this series.  To this date my TomTom PNA does not inform me if my destination is on the right or on the left hand side of the road; very important information when traveling in any larger city.

Back on the “Old Continent“, I was surprised to see that my PNA’s internal memory would not house the complete set of TomTom’s version of Western European maps thus dividing it into Northern and Southern Europe and forcing me to choose and reload every time I am traveling.  Additionally, my PNA does not provide any slot for additional data cards!  What an antiquated technical limitation considering the fact that memory has never been so readily available. May I respectfully remind you that both Flickr and Yahoo Mail offer a whopping 1TB of free memory, and Google Mail 15 Gigabytes!

However, the main point of this letter is the fact that TomTom charges £74.95 every year to keep the map content updated.

 

TomTom justifies its yearly fee of £ 74.95 by “packaging four updates” within its price.  Harold, do you earnestly want your customers to believe that GPS maps require an update every three months?  Considering the GPS market as a whole, an annual £74.95 price-tag is astronomical when considering the fact that Google provides its navigation app, including all updates, for free!  The one major advantage that TomTom has over free navigation apps for smart phones, is the size of its devices.  For this reason I would like to keep my TomTom GPS device.  However, in order for your company to remain competitive, and I would even go as far as suggesting, in order for it to survive, I would like to strongly make the following recommendation.  Remove the cost of updating maps immediately and make the digital map content available for free!  This must be done if TomTom wants to maintain its business credibility and put an end to the down-sliding of its sales.  Just like I refuse to pay £74.95, I would like to suggest that many other customers feel the same way!  Since 2007, TomTom has lost almost 50% of its sales.  It is time for TomTom to realize that its PNA’s business model is antiquated and possibly soon to become redundant.  It’s better to face reality right now, turn things around, adopt a new business model (more later), than eventually lose the market altogether don’t you think?

 

What is going to be the business future of TomTom? In a recent article: “Navigation device maker TomTom sees Q2 profit fall 14 percent as European crisis hits sales” Associated Press writes:  “TomTom NV, Europe’s largest maker of navigation devices, says its second-quarter net profit fell 14 percent to €8 million ($10.6 million) from the same period a year ago, as sales to car makers were hit by the ongoing financial crisis… The company said Thursday that sales for the quarter dropped 4 percent to €250 million ($331 million), including a 13 percent fall at the automotive division that makes navigation systems built into new cars.”

 

TomTom’s sales woes should not be surprising as the PNA market shrinks in both Europe and Northern America.  In a past article from the GPS News “TomTom Revenue Down 17% in 2012, Outlook for 2013 is Challenging”  “TomTom indicated that the PNAD market size in Europe was 2.5 million units (2012) compared to 3.2 million units in the same quarter of last year (2011)…The North American market size was 2.5 million units (2012) compared to 3.7 million units last year (2012). TomTom market share in North America declined to 19 percent compared to 27 percent in the prior year.”

 

Harold, it is time for TomTom to cut to the chase and face reality and turn things around.  As the Germans rightly say “better an end with a fright than a fright never ending”.  If Tom Tom wants to turnaround and become successful again I would like to suggest the following recommendations:

 

1. Transform your company culture and make it customer-centric.

2. Have every employee at TomTom reapply for his/her job or a new position.

3. Make sure every re-hired employee is 100% in tune with TomTom’s culture.

4. Create cross-functional teams to actively destroy silos and sub-silos.

5. Fire employees (especially mid-management and VPs upholding a silo culture mentality.

6. Move all the digital map material to the cloud and make it available for free and connect your services to Twitter, Facebook, LinkedIn, Google + Yelp and Foursquare.

7. Have the board communicate with end-users and start crowd-sourcing for new PNA ideas.

 

I sincerely wish TomTom much success because I still think there is enough time to turn things around.  Time is pressing on, and TomTom has only three months left in 2013 to implement some of the changes I am suggesting in this blog overview

 

Kind Regards from Hamburg, Germany

 

Bruno P. Gebarski