TomTom aims to make personal navigation devices as common in small and medium-sized cars as in the premium segments.
It isn't there yet. But Amsterdam-based TomTom, the market leader in personal navigation, is achieving strong growth.
TomTom sees its biggest opportunity in small and medium-sized cars.
The company has concluded a series of agreements with automakers. TomTom and Nissan agreed earlier this year to offer TomTom navigation as an option on all versions of Nissan's new small minivan, the Note.
Agreements also have been signed with Toyota, Opel, Peugeot, Hyundai and Seat.
"Manufacturers are starting to recognize that car navigation can play an important role in the volume segment of the market," said Harold Goddijn, CEO of TomTom.
"What we try to do is reach the mass market; we want to make navigation a much more mainstream technology," Goddijn said in a telephone interview.
The main avenue into the mass market is price. TomTom's devices sell for between E250 and E700, whereas in-dashboard systems generally cost more than E2,000.
TomTom also sees its short time to market as a major selling point. It comes out with new products regularly, each easily can be fitted into any car model, and software updates are simple.
"With cars' life cycles of eight to 10 years, the industry is facing a challenge of how to make sure that cars are equipped with the latest technology," Goddijn said.
Rocky road ahead
TomTom is targeting new cars, but company executives are equally excited about opportunities in the used-car market.
"Ninety percent of all cars in Europe don't have a navigation system, so our volume growth can only be achieved by addressing existing car owners," said Goddijn.
Analysts are impressed with TomTom's stellar growth in recent years. But they wonder when increased competition will start slowing down the company.
"The interesting question going forward is how much longer TomTom can defend its margins," said Nicolas von Stackelberg, an analyst at Sal. Oppenheim in Germany. Von Stackelberg expects competitors such as Navigon, Sony, Garmin, Harman/Becker and Blaupunkt to take market share away from TomTom.
But TomTom's CEO believes the company will capitalize on its lead in a growing market.
Said Goddijn: "In the medium term, we believe in the wider application of this technology. There is a lot to be done in in-car navigation and we've only scratched the surface."
TomTom is aggressively marketing its systems through just about any conceivable channel. In the US, for example, TomTom units can be bought in 8,500 retail outlets, up from 5,000 at the end of 2005.