TomTom in Daimler live traffic data deal TomTom will supply Daimler with live streaming traffic data for built-in navigation systems in Mercedes-Benz cars, one of three automotive deals the Dutch company has announced at the Geneva motor show as it struggles to survive shrinking demand for personal navigation devices. As with contracts with Fiat and Toyota Europe that TomTom announced on Tuesday, no financial details were announced. But the moves are part of the company's urgent effort to win automotive clients for its navigation data, as built-in dashboard devices, along with smartphones, steadily drive out its traditional navigation devices business. TomTom's revenues fell 17 per cent last year to just over €1bn, and the company has cut its 2013 forecast to between €900-€950m. With the navigation devices market in the US and Europe expected to contract a further 15-20 per cent this year, TomTom, which once defined the sector, is in a race to restructure itself primarily as a licenser and developer of map and traffic data and software. "2013 should be the year where we start turning things around," Harold Goddijn, chief executive, told the Financial Times. One of the company's highest-profile licensing efforts, providing map data for Apple's new Maps app, went sour last fall when frequent glitches forced Apple to apologise to customers. "We had some explanation to do to customers, but we pointed out that the data we brought to Apple were correct," Mr Goddijn says in an interview at TomTom's headquarters on Amsterdam's new hypermodern waterfront. The problems, TomTom says, lay in Apple's integration of data from different vendors. The shift to data and services has been much harder going for TomTom than its initial entry into personal navigation devices in 2004. Mr Goddijn recalls those days of feverish growth that saw revenue increase from €192m in 2004 to €1.7bn in 2007. The adoption of that technology beat all expectations, it went faster than fax machines and mobile phones. It was one of those moments in history where you're there with the right product at the right time," Mr Goddijn said. But then came the iPhone, and customers began shifting to free navigation apps, especially Google's. TomTom's strategy for survival relies on three elements: licensing its mapping data to others, winning automotive clients, and providing business navigation solutions for companies like express-delivery firms. The most important piece is the licensing business. That's where our strategic value is," Mr Goddijn says. TomTom's major competitors in licensing geographical data are Google and Navteq, which is owned by Nokia. With mobile information increasingly organised into the three "ecosystems" of Apple, Google and Microsoft, which provides Nokia's operating system, Mr Goddijn says TomTom has an advantage as the only independent navigation licenser with a neutral business model and no interest in competing with potential clients. But to make that neutral position work, TomTom's development teams must be able to easily integrate its data into products made by other providers, including competitors. In the Mercedes-Benz deal, for example, TomTom will provide only a subscription to its live traffic information, which it calls HD Traffic. The dashboard infotainment device itself, which Mercedes-Benz calls "Comand," is built by US device maker Harman, and does not use TomTom's maps. TomTom makes the dashboard navigation devices for Fiat and Renault, but is no longer focusing on developing hardware devices. In its recently announced deal with PSA, makers of Peugeot and Citroen, TomTom will supply maps and traffic data for devices built by Continental. The software and data parts of TomTom's business have lower revenues than its traditional hardware businesses, but they have much higher profit margins, generally 70 to 80 per cent. The Toyota and Mercedes deals "are nice, but not too sizeable," said Maurits Heldring of ABN Amro, who estimates the revenues from the deals at several million euros per year. As TomTom shifts to high-margin software rather than hardware, Mr Heldring said, "the revenue top-line might stabilise in three to four years" time" while generating significantly higher earnings. The shift to acting as a vendor to larger clients carries risks, as with the blowback from Apple Maps last fall. Mr Goddijn says it is crucial for TomTom to stay in the background when it sells to other companies, "to be able to license that data to anyone irrespective of brand concerns." But the ultimate threat to the company comes from its competitors in the pure mapping and data realm. Google and Nokia, which owns Navteq, both have far deeper pockets and greater resources than TomTom with its 3500 employees can muster. To prepare for the competition, TomTom has eliminated its net debt over the past two years and is now cash positive. Mr Goddijn says its revenues are adequate to support needed investment in software development and the continued high costs of keeping maps up-to-date as it faces off against its bigger rivals. But it will not be easy. "Man, we should be able to get those products out faster," Mr Goddijn said. We invested a lot in 2012 to become faster, but we need to get faster.