TomTom says PNDs are no longer exciting enough to the consumer

Excerpts from Reuters and TomTom:

Dutch navigation device maker TomTom reassured investors by keeping its 2010 outlook intact in the face of stiff competition from free navigation on smartphones.

In the quarter, TomTom’s PND market share in Europe grew from 44% to 49% compared to the same period last year. The market size in Europe was 3.1 million units (Q2 2009: 3.7 million; Q1 2010: 2.8 million).

In North America our market share grew from 19% last year to 23%. The North American market size was 3.3 million units (Q2 2009: 3.5 million; Q1 2010: 2.6 million).

TomTom’s business model and that of its main competitor, Garmin, have come under pressure after Google and Nokia began offering free navigation features on their GPS-equipped smartphones earlier this year.

TomTom Chief Financial Officer Marina Wyatt acknowledged that the market for personal navigation devices (PND) was under strain.

“The PND market or segment .. is not the most exciting product right now,” Wyatt said.

“When you are thinking of your consumer electronics purchase it is just not the most exciting thing on the market,” Wyatt told Reuters, adding that the sector needed more innovation.

TomTom has responded to the threat from Google and Nokia by shifting its business mix toward high-margin, value-added services, making its PNDs a smaller portion of total income.

TomTom said the North American PND market gained 27 percent during the second quarter to 3.3 million units from 2.6 million in the previous quarter.

TomTom has high hopes of a new open software architecture, which will be available in September in 33 countries in its recently announced GO 1000 LIVE device.

The introduction of the new device is an attempt to stop the trend of dropping average selling prices, which has eased during the second quarter and is expected to continue, Wyatt said.

See TomTom’s full press release here.

Courtesy: Reuters, TomTom.

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