TomTom sells telematics division to focus on mapping

TomTom is offloading its telematics and fleet management division to Bridgestone, the world’s largest tyre manufacturer, for just over $1bn (€910m). The move comes as TomTom tries to shift its focus to digital maps, location services, and the high definition maps needed for self-driving vehicles. This is to catch up to and counter the progress of Here, as well as Waymo.

Based in Japan, Bridgestone says it plans to use the data generated by the 861,000 vehicles (49,000 customers, 200m data points daily) monitored by the new purchase, to improve its product development and maintenance systems. The telematics wing accounted for 18% of TomTom’s 2017 revenue, employing 670 staff, and the company had floated the idea of selling Telematics a few months ago.

Rumored rival bidders include Verizon, Microsoft, Daimler, and Michelin. Bridgestone is said to be planning on exploring sensor integrations with the tyres, in order to gather more precise usage data. TomTom has already laid the foundation for gathering and processing that data, meaning that Bridgestone will have an easier time expanding on that template if needed.

Many manufacturers will be able to see parallels in the deal. For Bridgestone, this is a way to move beyond the single-touch offering, where it does not see the tyre again once it has been sold. There might be ways to scrub data from automotive service centers and dealerships, to work out when its tyres have been replaced, but the quality of the data, and the associated insight that should be able to be gleaned, is so much better when pulled from the vehicle usage data that the telematics wing will have.

In time, Bridgestone might be able to add more data points to this platform, via tyre pressure sensor data or driving data it could pull from the automakers. In addition, an out-of-band sensor, one that wouldn’t rely on the vehicle’s integrated communications channels, could be an avenue worth exploring. The LPWAN crowd like to make grand claims about use-cases, but a Sigfox or LoRa powered sensor that recorded usage could be very valuable to Bridgestone.

What’s more, the sensor data could allow Bridgestone to provide additional services, instead of simply a consumable good. The obvious one is some form of subscription service, in which replacements for worn tyres can be ordered and the fittings booked as part of an annual or monthly fee. The automakers themselves would prefer if that relationship was retained with the customer, but the likes of Bridgestone are excellent partnership opportunities for the brands.

“After a thorough review of strategic options, we have determined that the sale of Telematics to Bridgestone is in the best interest of both Telematics and our core location technology business,” said Harold Goddijn, TomTom’s CEO. “We will continue to invest in our innovative map-making system, enabling faster map updates while lowering operational costs, paving the road towards autonomous driving.”

TomTom says that it wants to keep a healthy amount of cash on its balance sheet, to fund bolt-on acquisitions when the opportunity arises. It is planning on using around 82% of the purchase revenue as a capital repayment to shareholders, ahead of a share consolidation later in the year.

The cash should enable it to make moves against both Here and Google/Waymo, the latter of which has both the mapping platform (Google Maps) and the automotive ambitions, by way of Android Auto and Google’s Waymo division. The latter is perhaps most concerning, as Waymo-powered vehicles would feed data into Google Maps, enriching the system. That’s the same dynamic that Here is pursuing, where data from cars powered by Here’s mapping systems is used to improve and update the map, and in turn Here’s Open Location Platform (OLP) – which has just launched fully.

But Google is also moving into the IVI space, by way of Android Auto. The sector has been the domain of Here and TomTom for some time, and if Google can persuade automakers that it has an alternative, the pair will be threatened. Renault-Nissan says it plans to use such a system, starting in 2021, and Google might find itself able to accept lower prices in exchange for access to the data that will enrich its myriad of other web services. That could be of great concern for both TomTom and Here.

The Bridgestone deal comes not long after a productive CES for TomTom. It announced that its mapping services were powering over 500,000 SAE Level 1 or Level 2 vehicles, capable of adaptive cruise control and self-parking. It also unveiled a development partnership with Denso, looking to use TomTom’s HD Map to power an autonomous driving system for Level 2 applications, as well as a deal with Delphi, which will feed location data to the Delphi drivetrains in order to improve driving performance – such as upcoming gradients and speed limits.