TomTom Maps Out Tele Atlas Deal

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During the 2006 holiday season, MiTAC made headlines by slashing the price of a product called the DigiWalker to $150 in order to give it a price advantage against products from Garmin, TomTom, and Magellan (see BusinessWeek.com, 12/12/06, "Navigating the GPS Price War"). In February, Mio acquired Navman, a PND company with roots in New Zealand, from Illinois-based boat builder Brunswick (BC), which had owned it since 2004. That was good enough to put MiTAC in a solid third-place position with 20% of the global PND market, behind TomTom's 37% and Garmin's 25%, according to a recent iSuppli market estimate.

Navigating Possible Transactions

Another would-be buyer is Google (GOOG), given its ongoing interest in mapping data and services on Google Maps and Google Earth. It's also a Navteq customer already.

Even if they aren't eyeing a transaction, some companies are likely to reevaluate how they do business with Tele Atlas under TomTom. "If I were big enough I'd acquire Navteq," says H.P. Jin, chief executive of TeleNav, a Silicon Valley startup that specializes in putting navigation on mobile phones. "[Tele Atlas has] created a conflict of interest that they're going to have to address."

But TomTom's head of investor relations, Taco Titulaer, says his company's existing customers have no cause for concern. TomTom's plan, he says, is to create a two-way relationship with its customers, relying not only on Tele Atlas' regularly updated maps, but also on its user base. Typically, navigation devices transmit data in one direction—to the user.

But TomTom's latest line includes two-way devices that can share live data about where they are, giving an up-to-date picture of such things as traffic conditions. TomTom has teamed with Vodafone (VOD) in some European countries, and asks its customers to voluntarily allow their devices to share their location anonymously via wireless phone networks. TomTom President Jocelyn Vigreux says 70% of customers are taking part in the data sharing. "If we don't give comfort to Tele Atlas' other customers, there is the worry that they will walk away," he says. "I'd say to MiTAC, don't be afraid, because what we're going to give you is going to get much better."

Hesseldahl is a reporter for BusinessWeek.com.