What does a company do when Google simply announcing a free service causes its share price to plummet by twenty percent? If you’re TomTom, you take a leaf out of Don Draper’s book and try to change the conversation: ignore the looming mobile elephant in the room and try to sell satnavs by making traffic “sexy” instead. Will it work?
According to Corinne Vigreux, managing director of TomTom’s consumer business unit and wife of the company’s founder, TomTom’s priority is not getting you from A to B, but managing traffic – “load balancing”, as she puts it.
The redirection is part of the company’s new Break Free marketing campaign, which aims to underline the stress caused by traffic. Vigreux, who was listed in the 2007 Sunday Times Rich List, says that being stuck in a jam can cause a 60 percent increase in physiological stress, and particularly affects men. “We’re here to save males from stress,” she says.
TomTom’s LIVE series of connected satnavs use SIM cards to connect online, and calculate live traffic based on anonymous data from mobile users and other TomTom HD traffic users, then reroute drivers accordingly. The company says data from more than 81m devices globally is used, and that it has made more than 2trillion speed calculations so far.
Vigreux makes no mentions of rivals during her presentation to journalists in London, but the shift is likely to be in response to the increasing capabilities of free turn by turn direction services on smartphones.
In 2009, TomTom’s stock dropped 20 percent in a day on the announcement of Google Maps Navigation for Android phones. Android is now the dominant smartphone operating system in the world, according to research firm estimates .
Just months afterwards, Nokia made its own solution free on Symbian smartphones, announcing the move in the very same room as Vigreux spoke in this week. Microsoft’s upcoming Windows Phone 7 Mango update meanwhile will also provide free voice directions and route calculation.
TomTom sells its own iPhone app on the iTunes App Store, but is hedging its bets with connected services and a higher pricetag (£39.99) to compete against these free offerings.
Can simply trying to tell people to drive on a side road solve woes and print money at the same time though? Vigreux thinks so. “People are very cynical about traffic, they think there’s nothing you can do about it,” she says.
“We think there is a viable way to reduce traffic congestion…there’s a real difference with that’s available today…You can really have a proper load balancing of congestion if you know the speeds on all the roads.”
TomTom estimates that with ten percent of people using HD traffic in an area, there is a perceivable “collective effect”, with roads flowing more smoothly.
Whether TomTom can get enough users onboard to hit that critical mass remands to be seen, but it’s trying: Vigreux reveals that TomTom has hired “probably the only PhD in traffic in the world.” Is that enough to take on the brain trust at Google? Time – and wallets – will tell.
Image credit: Google Finance
