Dutch navigation device maker TomTom sees the United States as its strongest growth market and eyes the automobile industry as a key sales channel, the head of its US unit said on Tuesday.
TomTom, which is approaching a 25 percent share of the US navigation device market in second place behind Garmin Ltd, derived 10 percent to 12 percent of its first-quarter revenue from the United States, according to Jocelyn Vigreux, president of TomTom Inc USA.
"That's increasing," Vigreux said in an interview with Reuters. "There is some significant growth going to come from the US ... it is the biggest growth market right now."
Citing estimates from consumer electronics research firm NPD that US unit sales of personal navigation devices grew about 300 percent in the first four months of 2007, Vigreux said he expects this growth to be sustained for the full year.
"What we're seeing here is a quarter-over-quarter and year-over-year 300 percent growth," said the executive, who compared this to a 100 percent growth rate in Europe, where TomTom leads the market with a 50 percent share.
He repeated the company's target for total 2007 revenue of $2.1 billion to $2.4 billion up from $1.8 billion in 2006. Vigreux added that the automobile market is also a key growth area for navigation system makers. So far only about one in 10 US cars have a built-in navigation system, he said.
"There are a couple of very large car companies that have precisely asked outside manufacturers how to handle navigation within their vehicle," he said. TomTom said in March it would open a unit in Eindhoven, the Netherlands, aimed at accelerating the build-up of its automotive research and development.
But Vigreux stressed that the complex and expensive process of integrating the communications systems directly into cars may slow the pace of adoption. "Remember, built in navigation systems are $2,000 to $3,000 today. This (TomTom device) is $500," he said pointing to the company's upcoming Go 720 device. NPD analyst Stephen Baker said that price reductions of existing devices were helping to boost growth in US demand.
"It doesn't look likely that this year unit volumes will slow down. Prices are falling and there really doesn't seem to be anything to indicate that this category won't continue to grow at that kind of rate this year," Baker said. Baker said that average device prices had fallen to $410 from $704 in the same period a year ago.
Vigreux made the projections at the same time as the company introduced a new dashboard navigation device, which provides driving directions and information about local services such as restaurants.
TomTom said a new device for the US market - the Go 720 - will let users add data to their device map as they see changes, such as new street names or traffic restrictions. Users will also be able to share information with TomTom's 10 million users around the world, according to Vigreux. The device, which will go on sale in July for $499, also has a built in voice recorder so that users could be directed to a destination by the voice of a friend or family member.
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