TomTom To Use Mobile Phone Location Tech With Applied Generics Takeover (news release)

Location-based mobile services, such as tracking your child at the playground, finding a friend at a sporting event or managing a fleet of delivery drivers, may be a step closer to reality with TomTom’s recent acquisition of Applied Generics. The Scottish company has developed a system deployed over mobile networks that provides real-time data on the location of mobile users. While TomTom will use the system to improve the traffic information on its personal navigation devices, sharing the data with mobile network operators and third-party service providers could also open up a promising new revenue stream for the company.

TomTom relies mainly on the location coordinates from satellite systems to pinpoint its customers. Through its acquisition of Applied Generics in January 2006, TomTom gains access to technology that uses low-level signalling data from mobile networks to determine the location of mobile devices and their users. If TomTom successfully deploys this Geographical Information System (GIS) with mobile network operators, TomTom can offer real-time information on the location coordinates of a population that reaches far beyond the size of its current customer base.

TomTom’s main motive for the acquisition was to gain access to Applied Generic’s flagship software RoDIN24. The system analyses mobile network data anonymously for high-quality and real-time traffic information. Through the acquisition, TomTom hopes to increase the quality of TomTom Plus, its road information service. The company is interested in collecting the traffic data for its own use as well as selling on the information to third parties.

In addition to traffic information, Applied Generics markets systems for tying the location of mobile phones with the mobile user identity. Demand for subscriber location data like this is expected to grow significantly over the next few years and will quickly become a key building block for offering digital connectivity services. Revenue projections by Telecompaper suggest true potential for mobile location-based services, with uptake by a small, but high-usage group of customers able to already generate significant revenues. While TomTom acquired Applied Generics primarily for the traffic information, the company offers a good starting point if TomTom decides to develop location-based mobile services and broaden its revenue sources. The company is in a good position to steal the limelight in this emerging market, helped by good momentum in its core market for navigational devices, the fruits of its successful IPO and its international market focus.

Barriers still need overcoming: this market will not be taken quickly. Mobile network operators may be hesitant to share their data on subscriber locations, while privacy issues may form a concern among end-users. The technology may address quality concerns of existing road information services, but may not be the key to offering relief from road congestion. The revenue possibilities however make it a promising bet for both TomTom and mobile network operators.