Dutch navigation company TomTom NV aims to become a main provider of technology for self-driving cars as it charts its way back to success after seven lean years, chief executive officer Harold Goddijn said.
Goddijn said that an overhaul of TomTom’s digital mapping architecture lies behind a renaissance that has seen its automotive division win big contracts in recent months, prompting analyst upgrades and a 40 percent surge in its shares.
He said carmakers are now betting on TomTom as one of the few companies besides Google Inc capable of providing location data good enough and fast enough to meet the safety requirements for computer assisted driving — and ultimately, self-driving cars.
“We are seen by our customers as the guys with the right ideas on how you do those things,” he said in a interview, relishing the company’s comeback story.
A rare example of a global consumer electronics brand to come out of Europe in the 2000s, TomTom went into a tailspin after overpaying for digital mapmaker Tele Atlas NV in 2008.
The market for its main product, personal navigation devices, entered a brutal decline. Prices fell and margins were crushed as cheaper competitors entered an increasingly saturated market for dashboard-mounted GPS systems, and smartphone navigation apps offered an even cheaper substitute.
Analysts’ enthusiasm has been fired by contract wins with carmakers, including two with Volkswagen AG this year as well as deals with Fiat SpA, Hyundai Motor Co and Kia Motors Corp.
However, TomTom’s revenue base has also diversified.
Its consumer product offerings have expanded to include fitness watches and a line of GoPro-style action cameras.
It also licenses its digital maps to tech giants. One of TomTom’s few bright moments during the dark years came in 2012, when Apple Inc, seeking to end its reliance on Google, chose TomTom’s maps to use in its own navigation app, starting with the iPhone 6.
Finally, TomTom has been quietly building up a “telematics” business, providing the telecommunications systems used in car fleet management, which has become the largest of its kind in Europe’s fragmented market.
In the interview, Goddijn said the unit, which reported sales of 110 million euros (US$124 million) last year, has the potential to grow sales at more than 20 percent per year for the coming five years without acquisitions.
However, TomTom’s mapping technology is at the core of investor demand that has given the company a 1.8 billion euro market capitalization despite profits last year of just 22.7 million euros.
Its maps can now be redrawn on the fly, integrating feedback from cars on the road and then shared immediately with other drivers.
“No one else has that,” Goddijn said.
Cars are increasingly equipped with multiple sensors, not only GPS positioning and mobile phone connections, but radars and cameras.. Lidar, reflected laser imaging, might also be added in future.
Goddijn said the overhaul of TomTom’s digital mapping architecture “gives us a lot of confidence” this proliferation of data can be processed in a way that ensures users’ safety, adding: “It’s exciting and it’s scary, because millions of cars will come and there’s tons of data going to be produced.”
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