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GPS obsessed

23 July 2012

GPS device pricing will stabilize in 2009: TomTom’s president

GPS navigator prices will stabilize in 2009, predicted TomTom president Jocelyn Vigreux in an interview with Tech Trader Daily.  As the global economy continues to struggle he says the price elasticity of PND prices is decreasing.  He cited entry-level TomTom devices priced at $79 this Christmas didn’t sell well despite costing twice that amount last year, selling like hotcakes then.

He didn’t comment on financial forecasts for 2009, but revealed that some employees were laid off in the United States last year.

He also maintained that the ubiquity of GPS-enabled mobile phones is not a threat to the PND industry.  He points out that while mobile GPS may be a more effective solution for pedestrians, drivers are demanding PND’s with larger screen sizes and features like voice-guided turn-by-turn directions.  Not all analysts agree though.  Last week, Goldman Sachs’ Thomas Lee downgraded Garmin from Neutral to Sell, and cut its target price from $21 to $15.

Says Lee:

“We believe the current economic slowdown plus increased smartphone GPS usage and limited diversification options will drive material rev/EPS decline over the next several years.  While the shares look attractively valued, we believe trough multiples are likely to see lower levels given the structural changes.”

But with its latest device arriving at CES 2009, TomTom confirms its confidence in the future of portable navigation devices.  The GO 740 LIVE is the first connected GPS device to hit the United States-aside from the now-defunct Dash Express-offering real-time traffic updates, Google Local search, and a variety of other localized internet services.

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