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Time to End the TomTom, Apple Game of Chicken

by Roger Lanctot | May 09, 2016

After its latest somewhat disappointing earnings report and TomTom's less than disappointing earnings report, the time would seem nigh for Apple to make a long awaited and desperately needed move in navigation with TomTom.  Despite more than half a dozen acquisitions in the navigation space Apple is a non-player in navigation.  TomTom, on the other hand, rules the traffic information market for systems built into cars.

When TomTom and Apple first started their dance operational security was paramount.  TomTom executives at headquarters in Amsterdam were only allowed to refer to a "fruit company" or "Muskoka."  The name Apple could not even be uttered.

To this day, the relationship that provides Apple with access to TomTom maps and TomTom with access to Apple probe data cannot be confirmed.  The don't ask don't tell regime prevails.

But it is clear that TomTom's rise to dominance in in-dash traffic information has been enabled by Apple's handset data probes.  TomTom has also become reliant on Apple's probe data to refine and edit its maps.  Meanwhile Apple has gained little or nothing from access to TomTom's map information.

Apple is now poised on the cusp of pursuing a deeper role in the automotive industry expected to include the creation of an Apple car presumably including self-driving capabilities.  Apple is also heavily engaged in pushing its CarPlay in-dash smartphone integration.

Apple CarPlay, like Google's Android Auto, has yet to set the automotive world on fire.  I have long argued that an Apple CarPlay infused with competitive traffic information, automatic crash notification, wireless traffic light connectivity and a host of deeper application integrations built around navigation could be a game changer.  Buying TomTom will change that game.

Alternatively, Apple could pull the plug on the TomTom relationship - the existing contract includes an escape clause for Apple - and go its own way - building its own traffic solution to compete with TomTom and drive TomTom out of its hard won dashboard positions with multiple OEMs around the world.  Given Apple's lack of progress on navigation I don't see any hope for this latter option.

No.  Apple needs a deeper engagement with TomTom to leverage high definition maps and to affix its own brand to the superior traffic information offering now residing under TomTom's brand with Apple's data.  TomTom's traffic success is more or less a Potemkin village built upon Apple's undisclosed probe data contributions.

There is an alternative path with TomTom partner, Uber, scooping up the Dutch mapper for its navigation and self-driving enabling high definition map content.  But Apple's interest is backed by cash - and TomTom's value is inextricably wedded to Apple's probe resources. 

It's time for Apple CEO Tim Cook to end the charade, write the check, and take credit for the best in-dash traffic data in the business today - and then add that traffic data to Apple CarPlay.  With a more compelling CarPlay offer, Apple can then begin advertising its integration relationships with multiple car makers and start stepping up its automotive game.

All of this, of course, will serve as precursor to the creation and launch of an own-branded Apple car with the best smarthpone integration and traffic data in the industry and, maybe, a cutting edge self-driving platform.  TomTom has many of the answers to what ails Apple.  TomTom even has some consumer products that will no doubt perform better in the market with an Apple brand and distribution channel.

How about it, you two?  Time to get a room.

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