Overview

2.1 About TomTom


TomTom has transformed the lives of drivers with the introduction of portable navigation devices for consumers, enabling drivers to navigate easier and safer. TomTom's enduring purpose is to transform mobility through its products, including location technologies, Connected Car services and consumer products.

2.1.1 Foundation

2.1.1.1

Founded in 1991, TomTom has grown from a Dutch-based start-up company into a leading European technology company. The original founders are still with the company and together with over 4,700 employees are committed to improving people's lives by transforming mobility.

TomTom began with software development for mobile applications and personal digital assistants (PDAs) in 1991. TomTom soon became the early market leader in navigation applications for PDAs, such as RoutePlanner and Citymaps. In 2002, TomTom launched the Navigator application, for the first time, providing customers across Europe with affordable and easy-to-use turn-by-turn satellite navigation.

A year after the successful launch of TomTom Navigator, it was clear there was a strong demand for an all-in-one, easy-to-use, portable navigation product. The result was not just a new product, but also an entirely new category in consumer electronics: the Portable Navigation Device (PND).

The PND became one of the fastest selling consumer electronics technology in history, becoming the trusted travel companion for millions of drivers. Demand grew rapidly across Europe and North America and in the 12 years since its launch, over 81 million TomTom PNDs have been sold in 41 countries.


2.1.1.2

TOMTOM WAS FOUNDED ON THE IDEA OF MAKING innovative technology available to everyone

2.1.2 Diversification

2.1.2.1

In the years that followed, we continued to innovate and diversified our product portfolio, to serve both consumers and businesses. 

TOMTOM'S PRODUCTS INCLUDE maps, traffic, navigation software, fleet management services, sports watches and PNDs

In 2013, we entered a new consumer product category when we introduced our first TomTom GPS sports watches. We pioneered optical heart-rate measurement in the watch, eliminating the need for chest straps and we added a music player, removing the need to carry a smartphone for music.

 

We acquired a number of new businesses including: Datafactory, which has become TomTom Telematics; Applied Generics, which provided the initial technology for TomTom Traffic; the automotive engineering team from the Siemens R&D division, which provided the resources for our diversification into Automotive; Tele Atlas, one of the global digital mapmaking companies in the world, which is now part of the foundation of our location technologies; and Autonomos GmbH, strengthening TomTom's position in Autonomous Driving.

Our Telematics business is now the largest and fastest growing telematics provider in Europe, with an installed base of more than 696,000 vehicles at the end of 2016.

We are revolutionising the way maps are updated and delivered, with our new transactional mapmaking platform, which over time will enable near real-time maps. With the deployment of this technological innovation, we are positioned to address the need for accurate and up-to-date maps. TomTom has invented RoadDNA as an HD map component to enable decimetre-level positioning of vehicles on the road.

Because of the strength of our technologies, we have been able to form strategic collaborations with Automotive customers for Advanced Driver Assistance Systems (ADAS) and Autonomous Driving in recent years. Our leading traffic information and navigation software is transforming mobility for millions of people around the world every day.

2.1.2.2

2.1.3 Privacy and Data Governance

2.1.3.1

WE BELIEVE PRIVACY IS ABOUT FREEDOM AND BEING ABLE TO DECIDE FOR ONESELF how one's data is used and by whom; this is why we have established our Privacy Principles


TomTom is a highly data intensive company. To create and maintain our various products and services, we process billions of data points every day and, for example, we use petabytes of road side imagery every day. We do this on a global scale. A significant part of the information is contributed by our users or in other ways relates to individuals. It is paramount to the continuity of us being able to use our users' data that we retain their trust.

We operate according to the privacy laws applicable in the various countries we are active. Because we are rooted in Europe, European privacy laws also apply. These laws are considered to be some of the most extensive in the world. They offer a high level of protection to our users by only allowing us to use their data when the strict conditions of these laws are met. Our company policy on privacy and processing of personal data reflects these laws and we apply this policy globally. To make it easier for our users to understand this policy, we have translated them into ten promises we make. These can be found on our website: tomtom.com/privacy.

To be able to live up to our promises, we employ what is generally known as 'privacy by design'. Effectively this means that when designing and engineering our products and services, privacy and properly dealing with data from or about our users is a topic we consider right from the start and throughout our engineering and operations.


 

2.1.3.2

2.2 TomTom's activities at a glance

Our activities are organised around three businesses: Automotive & Licensing, Telematics and Consumer.

2.2.1

Automotive & Licensing

Automotive & Licensing business licenses maps, online services such as traffic and navigation software, to customers as components to use in their applications. These location-based application components are licensed through our Automotive business unit to automotive customers (mainly OEMs and Tier1 head unit vendors) for in-vehicle navigation, ADAS and Autonomous Driving. Through our Licensing business unit we provide these components to other than automotive customers such as technology companies, geographical information systems (GIS) providers, governmental bodies and traffic management institutions. Many customers, particularly automotive customers, use our system integration service to help them integrate our components into their navigation application systems.

Telematics

Telematics business provides a range of telematics services for businesses with a fleet of connected vehicles, including fleet management and other Connected Car services. Telematics also offers under-the-bonnet telematics devices and over-the-dash driver terminals.

Consumer

Consumer business develops and markets smart consumer electronics devices in the Drive and Sports categories. Drive products consist mainly of consumer portable navigation devices but also includes driver terminals for businesses. Sports products consist mainly of wrist-based wearables for sports and fitness activities.

2.2.2

2.2.3 Our People & Culture

2.2.3.1

WE ARE PAVING THE WAY FOR AN ENTREPRENEURIAL, AUTONOMOUS & LEARNING CULTURE; TomTom has over 4,700 global 'Intrapreneurs', all driving us into the future and leading the way for TomTom to be a success

2.2.3.2

People first, entrepreneurial, accessible, not standing still, trust and democratisation. These key values are the 'red thread' that binds the TomTom culture. These values are at the core of TomTom. Being able to think for yourself, taking risks and ownership and showing accountability are traits that can be found in almost every employee, at every level in the organisation. At TomTom, everyone acts as a business owner. Everyone is accountable.

After 25 years in business, the start-up mentality has never left the building. It is in our DNA. This environment allows for creative thinking, quick solutions and does not let organisational layers impede the process to just get things done. We aim to remain as flat as possible so that employees are able to work faster, smarter and with few constraints.

Our founder-spirit rubs off on each and every employee. The founders are still very involved in the company. TomTom is more than just an employer. TomTom invests in the growth of employees. It is a company where people can grow and learn faster than they can at other companies. And, given the influx of a new generation of young talent, learning and development is valued as one of the top three drivers and motivators of this generation.

Our employees are motivated, skilled and are ready to push the boundaries of what is achievable every day. At TomTom, they are encouraged to do just that.

2.2.3.3

2.2.4 Research & Development

2.2.4.1

TomTom invests a high proportion of its revenue in R&D, which covers all product development, including our map releases, our mapmaking information systems, product-related online services, device software, and hardware development projects.

In 2016, our R&D cash spending totalled to €283 million, an increase of 6% compared with 2015. We have over 3,100 people working in R&D across 36 countries.

 In our Automotive & Licensing business, the R&D investments include the following:

  • Transitioning our mapmaking and navigation software to the NDS industry standard navigation map format, which has been extended for ADAS applications and for Autonomous Driving;
  • Building an HD map for Autonomous Driving applications;
  • Ongoing development of our mapmaking information systems;
  • A new online service for predicting on-street parking availability, based on analysing location traces;
  • Machine learning in Autonomous Driving.

In our Telematics business, the R&D investment include transitioning our WEBFLEET back-end into a telematics service platform that can support a wider set of Connected Car services and modernising the WEBFLEET user interface framework.

In our Consumer business, the majority of R&D investments will be in our Sports category in 2017. We are also investing in our Bridge driver terminal range. 

2.2.4.2

2.2.5 Key Financials for 2016

2.2.5.1

 

WE REPORTED REVENUE OF €987 MILLION IN 2016 AND GROSS RESULT OF €566 MILLION; we are reducing our dependency on hardware products by growing high gross margin, recurring data, software & services business

2.2.5.2

In 2016, we delivered revenue of €987 million, a 2% decline compared with €1,007 million in 2015.  Automotive, Telematics and Consumer Sports businesses grew strongly, partially offsetting the reduction in Consumer Drive revenue; Consumer Drive remained the biggest revenue contributor for the group. Licensing showed a modest decline year on year. The proportion of hardware revenue was 51% (2015: 55%) of total revenue in 2016 and revenue from data, software & services accounted for 49% of total revenue (2015: 45%). From a regional perspective, 78% of our 2016 revenue was generated in Europe (2015: 77%), 17% in North America (2015: 18%) and the remaining 5% in the rest of the world (2015: 5%).

This year, our gross result increased with 9% to €566 million (2015: €519 million), mainly due to a change in our product mix. Gross margin was 57% compared with 52% in 2015. EBITDA reached €141 million, an increase of 14% compared with 2015 (2015: €124 million). EBIT amounted to €9 million in 2016, (2015: €1 million) reflecting the higher gross result partially offset by an increase in operating expenses. The net result for 2016 was €12 million (2015: €18 million), translating to adjusted earnings per share of €0.23 (2015: €0.21). At the end of 2016, the net cash position was €133 million (2015: €98 million).

2.2.5.3

 
For an explanation of the Non-GAAP measures mentioned above please refer to the section Non-GAAP measures.

2.3 Automotive & Licensing

Our Automotive & Licensing business provides maps and map-based components for customers to integrate into their applications. Our product portfolio includes live map feeds including traffic, APIs for search and routing, device software and supporting products.

2.3.1 Maps

2.3.1.1

Maps have long been used as a navigation guide for travellers and explorers. For the last years however, the usage and development of maps has taken an incredible leap forward. With everyone and everything becoming connected, location and mobility information is more relevant and important than ever before. With this increased reliance on maps, comes an increase in expectations of the use cases the map has to support, how up-to-date it is and the level of detail needed within it.

We can see this evolution in the different map layers of the TomTom's map product portfolio. Starting from the road network and street name layers for the early navigation maps, to point-of-interest (POI) layers, 3D layers and others, for more advanced search and navigation experiences to the HD map and RoadDNA layers that will enable Autonomous Driving in the future.

2.3.1.1.1

2.3.1.2

2.3.1.3 Intelligent Mapmaking

TomTom deploys intelligent mapmaking to deliver accurate and up-to-date maps. We invented a highly efficient hybrid approach that combines professional mapmaking methods with community input. Through this mapmaking approach, we tap into local teams of skilled map technicians located in more than 40 countries, a fleet of mobile mapping vans that drive the streets every day and our growing community of hundreds of millions of data sources. With nearly half a billion sources generating millions of kilometres of probe data each day we have access to the largest live probe network out there. In addition, we continue to explore new sensor data as cars become more and more connected, to further extend our pool of hybrid mapmaking data.

2.3.1.4 Transactional mapmaking

Making maps means dealing with big data and this requires an advanced map production platform. We continuously invest in our state-of-the-art transactional map production platform that allows us to rapidly close the loop between detecting changes in the real world and updating the map. This platform deploys automation and artificial intelligence to achieve short cycle times, efficiency and the right quality levels. Productivity of our map product platform will be key to the future of mapmaking where more data will have to be processed faster than ever before to meet the expectations of ever expanding use cases.

2.3.1.5


2.3.1.6 Mapmaking innovation

2.3.1.6.1

From creating one of the first digital maps in the world, to harnessing the power of community input, and more recently the developments such as our traffic sign categorisation artificial intelligence.

The innovation will not stop there; in 2017, we will further increase the productivity of our production system through automated multi-source map fusion and machine learning, further improve our cycle times to bring the most up-to-date maps to our users and bring new class-leading map layers to the market.

2.3.1.6.2

TOMTOM'S LEADING MAPMAKING TECHNOLOGIES ALLOW US TO RAPIDLY DETECT CHANGES HAPPENING IN REALITY and shorten the time for these changes to be reflected in our maps, continuously pushing the boundary towards the most real-time maps

2.3.1.7 Enabling Customers to make smarter mobility decisions

2.3.1.7.1

With these maps, TomTom is empowering users to make smarter mobility decisions from simple decisions such as how to navigate to the airport as quickly and efficiently as possible, or calculating the most accurate driving range of your electric vehicle. Also more complex decisions can be made in a smarter way, such as how to change a city's infrastructure to accommodate the mobility of a growing population, and in the future mobility decisions for the Internet of Things.

We generally categorise the applications that use our maps into four groups:

  • Analytics: the map is used as a structuring mechanism for data sets of other data, such as marketing data or government population data. The end user is nearly always a business. An example is determining the best location for a shop, based on overlaying population and traffic data on a map. There are many examples in this category where people do not realise that a map is used to make decisions.
  • Display, search and navigation: the map is used to answer questions such as 'Where am I?' 'Where is a certain address or place?' and 'How do I get to the place I want to be?'. The end user is very often a consumer. Examples are maps and navigation apps for mobile phones.
  • ADAS: the map is used to power functions that make driving easier, more efficient and safer. Examples are drive-train optimisation based on gradient and height, and adaptive light control to see further into the corner based on curvature data in the map.
  • Autonomous Driving: the map is used in providing detailed data about the vicinity of the car to help the Autonomous Driving software make decisions. An example is very precise (decimetres) localisation based on sensor data and the HD map.

2.3.1.8


2.3.1.9 Autonomous Driving

Autonomous Driving is set to transform our lives: it is expected to save lives through safer mobility, it will shift from private vehicle ownership to mobility services, and it will free up parking spaces in our cramped cities. TomTom is right at the heart of this technology trend with its products for autonomous vehicles.

2.3.1.9.1

Autonomous Driving is about replacing human drivers with robotic drivers. Humans use their senses, brains and limbs to drive. This is changing to sensors, computers and actuators.

First of all, TomTom's traditional strengths in navigation and traffic information are as important as they ever were for autonomous vehicles. They are the starting point for every autonomous drive: an autonomous car needs to know what route to drive and needs to ensure it avoids traffic jams where it can. The traffic feed is already used today to deliver up-to-the-second information beyond traffic as well, for example for road closures, accidents and hazardous situations.

Secondly, we have our HD map product. The HD map is a recording of the world made under ideal circumstances with superhuman sensors. HD maps are used in autonomous cars to improve safety and comfort. The HD map can be likened to a drone constantly flying over your head, telling the driver what is coming. In situations with dense traffic, poor visibility because of the weather, or at larger distances, the HD map is critical to ensure a safe ride. It allows the driver to see through the car in front or ahead to the next exit or beyond the next corner.

This is not only safer, it is also more comfortable, because decisions can be taken earlier and this reduces abrupt braking or last-minute lane changes.

When using HD maps, it is critical to have reliable localisation. GPS is not good enough, it is accurate to 10-20 metres when driving. It struggles to put the car on the right side of the road, let alone the right lane. TomTom has invented RoadDNA as an HD map layer to enable decimetre-level positioning. TomTom uses highly compressed pictures of the road surroundings which are compared in the car with what the sensors see. By matching the two, the car's position is precisely determined.

2.3.1.9.2

2.3.2 Traffic and Online Services

2.3.2.1

Cities already face severe mobility challenges, and as the tendency to live in cities increases, the traffic challenges are also becoming greater. According to the TomTom Traffic Index, drivers in London for example can expect to spend 38% of their travel time stuck in traffic at any time of the day, and up to 45% in evening peak periods. These delays add the equivalent of more than 18 extra working days travelling per year. Smarter and more efficient solutions are required to deal with traffic planning and control in order to organise safer, greener and more comfortable mobility in cities. TomTom believes that governments, automotive companies, service providers and drivers can reduce congestion dramatically by cooperating more closely, and is actively working towards solutions that will enable this goal to be achieved. The future is collaborative!

2.3.2.2 A global leader in Traffic and Travel Information

2.3.2.3

TomTom's flagship service, TomTom Traffic, has been continuously expanding its coverage reaching 54 countries in the beginning of 2017, spanning all continents. We have come a long way to position TomTom as a global leader of traffic and traffic information services. During the last 10 years, TomTom has created a comprehensive product portfolio for traffic and travel information as well as road data analytics to help improve mobility and provide solutions for better decision-making in transportation.

The success of its traffic incident and congestion service is largely explained by the growing community of half a billion data sources, which generate over 10 billion anonymous speed measurements every day. The community provides the source data that is fused to provide precise and up-to-date traffic information for highways, major roads and secondary roads on a global scale. We provide highly accurate measurements of traffic jams and delays for better route calculation, which helps drivers to make better decisions to save time on their journeys.

To complement the more mature traffic, innovative features and products such as speed cameras, off-street parking, weather and fuel price information services have been added to the portfolio. In 2016, we also announced on-street parking. The initial launch of the on-street parking service includes parking probabilities and search time information in a number of  cities in Western Europe, such as Paris, Madrid and London. We intend to expand this service with restrictions and pricing information – all aimed to relieve the omnipresent stressful urban parking experiences.

The whole portfolio of services is used widely across many smart mobility platforms and use cases by automotive OEMs, smartphone manufacturers and 'mobility app' makers, government organisations and a wealth of additional B2B and B2C users. 

2.3.2.4

2.3.2.5

In 2016, TomTom also announced the TomTom City web-based platform that provides live and historical traffic and travel information services to help transport and mobility stakeholders. The open-access portal showcases TomTom's capabilities to monitor, analyse and display an extensive range of information such as the current traffic situation or the worst bottleneck areas in each city. This platform will allow drivers and traffic management professionals increasingly to understand the situation and manage journeys accordingly.

THIS PLATFORM IS SET TO GROW IN THE COMING YEARS, extending to a full suite of traffic management tools to analyse the road situation in the fastest possible way and also influence driver's behaviour


A new generation of live map services

Today, the rise of the Connected Car, Smart Mobility and Autonomous Driving triggers the need for a new generation of connected services largely enabled by a collaborative community and new sources of vehicle sensors data.

Collaboration is key. The popularity of the TomTom services drives the volume of source data as anonymous passive community input, such as location trace data and sensor data, and active community input, such as confirmation of speed camera locations, is collected in conjunction with providing services. This source data is the assurance of an extensive, high-quality, portfolio of services in the coming years. By harvesting car sensor data, commonly referred to as extended floating car data (xFCD), in addition to the location trace information, TomTom will add services to cover new use cases such as road safety (e.g. hyper-local road weather service) and Autonomous Driving (e.g. lane-level traffic incidents).



2.3.3 Navigation

From the day we invented the PND category we have continuously invested in delivering the best navigation experience. End of 2016, we have provided our navigation software to over 100 million users, directly through our consumer business and indirectly through our other business units. We continue to learn from those users, through active and passive feedback, and improve our products accordingly.

2.3.3.1

Brought-in navigation is playing an increasingly important role, and our products are fit for purpose. Besides our own smartphone applications, in June we announced Volkswagen's release of a brought-in navigation application powered by NavKit, our navigation engine. In-dash navigation remains relevant as well. We expect that in five years from now around 25 million cars will be sold with embedded navigation globally and we will continue to invest in developing products that are relevant and easy to integrate in a vehicle context.

One of our strategic objectives is to adopt relevant industry standards. We have updated APIs for connected services such as Traffic and Speed Cameras. This further eases the integration of our products in an automotive connected navigation system. The NavKit navigation engine based on Navigation Data Standard (NDS) has been enhanced with features such as destination prediction and route learning. The  user experience for incrementally updating the NDS maps in the system has also improved, which can now be done in the background, so the driver can continue to use the navigation system while this happens.

We also made great progress with the architectural renewal of NavKit. Our map matcher, the component that derives the actual position on the road from raw GPS and car sensor input, is no longer considering just the actual data, but also takes historic path data into account. This improves the map matching quality, giving a better user experience.

Another strategic goal is to become a global navigation supplier. We have further increased our footprint to navigable coverage in 163 countries and territories, by adding support for Arabic, Albanian, Serbian, Romanian, Indonesian, Hebrew, Latin and Chinese countries. We have also started the development of Korean and Japanese features. Once those are in place, we will have reached our goal and will have a navigation engine, with a software development kit (SDK) and a set of APIs, to provide navigation around the world.

Our online capabilities have been further enhanced throughout the year. Our Online Routing API now supports truck routing, as well as eco routing and range calculations based on dynamic consumption data from the vehicle, which is especially relevant for Electric Vehicles.

2.3.3.2

In the third quarter of 2016, we won the TIOBE Software Quality award for mid-sized projects (more than 100,000 lines of code) for our new map visualisation component with an all-time top score of 99.77%. In addition, NDS NavKit was second in the large-sized projects (more than one million lines of code) category. These awards demonstrate TomTom's continued efforts to build great software and improve software quality to a world-class standard.

OUR NEW MAP VISUALISATION WILL BRING A SMOOTHER MAP BROWSING EXPERIENCE- including planning, zooming, rotating and tilting, scalability to multiple displays, moving lane guidance, and more

2.3.3.3

2.3.3.4 Approach to ADAS and Autonomous Driving

2.3.3.4.1

In self-driving cars, the navigation system gets a different function. For instance, instead of receiving guidance instructions for every manoeuvre along the route, people in the car will be more interested in getting an abstracted understanding of the trip. Until cars can drive autonomously everywhere, the navigation system will calculate routes that are optimised for Autonomous Driving, so the driver can take his hands off the wheel as long as possible.

When approaching a route segment where Autonomous Driving is not feasible, the driver needs to get informed that a switch to manual mode is forthcoming. Finally, NavKit will be integrated with camera-based lane detection systems and with TomTom's RoadDNA technology to enable lane-level positioning, lane planning and lane guidance. Extending support for ADAS and Autonomous Driving, our navigation components will continue to play an important role in future cars.

2.4 Telematics

Our Telematics business provides a range of services for businesses with a fleet of connected vehicles. These telematics services are provided to customers through a web browser, in reports that can be shared, through mobile phone applications or through an API that allows other systems to access the information.

2.4.1

The services use information related to the vehicle, such as GPS position and acceleration, or data that is collected from the vehicle, such as fuel usage or maintenance codes. They may also be related to the services that are connected to the function of the driver, such as work order status. Our own device, the so-called telematics black box or telematics control unit, that collects and shares the information with a back-end server, is integrated or connected with the vehicle.

We provide a range of devices, including the standard telematics black box, that uses power and ignition, OBD-II connected devices and devices that fully integrate with the CAN-bus, the internal vehicle communication system. The service can be complemented by a selection of driver terminals to provide better support to drivers.

The main telematics services are provided as a per vehicle subscription. Required hardwares are sold directly or provided on a rental basis in the monthly subscription fee.

Servicing fleet owners

The bulk of our Telematics sales include subscriptions to our flagship solution WEBFLEET. The platform is sold through a variety of channels, including a large partner network that resells solutions and an internal sales team, which covers 25 countries. WEBFLEET is an operational fleet management service for fleet owners that provides fleet vehicle tracking, fleet management reporting, basic work order services and an eco driving module. It helps fleet managers to make better decisions, have greater control over their vehicles and improve the efficiency of their fleet.

2.4.2

2.4.3

BY USING OUR FLEET MANAGEMENT SERVICES, THERE IS AN OVERALL QUICK RETURN ON INVESTMENT,  with some customers reporting savings in fuel usage and vehicle efficiency in excess of 20%

2.4.4

We serve any business that uses vehicles for their operations, from small service and maintenance companies, to long haul transport logistics. For the heavy goods vehicles, we have an additional portfolio to integrate with the vehicle's tachograph, support with special truck routing capabilities and integrate with other accessories in the vehicle, such as load temperature monitoring.

With WEBFLEET we also have one of the largest app development communities in the telematics industry. This community has access to WEBFLEET.connect API, which provides application developers and system integrators with a toolkit to access the data.

This allows vehicle and driving data as well as work order information to be integrated into customer's processes and IT systems, so that further automation can be realised. One example is the integration with Sage Live that was launched in 2016, which provides automatic mileage registration as part of the company's accounting solution.

More than 46,000 customers benefit every day from the high standards of confidentiality, integrity and availability of our ISO 27001:2013 certified service, re-audited by TÜV SÜD in November 2016.

Tomtom PRO Driver Terminals

Used in conjunction with WEBFLEET, our TomTom PRO driver terminals enable fleet managers to communicate more effectively with drivers. Next to professional navigation, the TomTom PRO 7250 provides work order integration, allowing users to report on the start and end time of jobs throughout the day.



The TomTom PRO 8270/5 is an open but controlled Android™ platform built around the TomTom Bridge, a unique connected mobility solution where navigation and business apps come together. While work orders are integrated and accessible via other apps, it also creates possibilities to communicate with the drivers about things such as rest times, as recorded by a truck's tachograph.

Connected Car Services

By combining our experience of providing Software-as-a-Service (SaaS) applications for fleet managers with Connected Car technology, we have extended our platform to also address the needs of the car services industries e.g. leasing, rental, dealers. This has enabled us to help these companies to increase their service performance as well as to build specific applications for their customers.

The services enable companies to monitor the status and whereabouts of the vehicles they provide to their fleet customers. It also allows them to build additional services on top of this. Examples include more information about maintenance and exact mileage driven for e.g. lease companies, or information about driving style for insurance companies.

The Internet of Things is a rapidly growing phenomenon, and the Connected Car is a special case within this; we expect to see a strong increase in Connected Car in the coming years. We also believe that the overall adoption of related services in the fleet sector will be fuelled by offering Connected Car services.

The TomTom Telematics Service Platform is uniquely positioned to take advantage of this growth as it has the capability to integrate multiple types of black boxes as well as to import information from a wide range of OEMs, and then bundle this into services aimed at either end customers or service providers.

2.5 Consumer

Our Consumer business is creating a range of sports watches and activity trackers, portable navigation devices, mobile phone navigation applications and action cameras. 

2.5.1

TomTom is one of the world's best known global consumer electronics brands, and one of the few remaining European-based technology pioneers. TomTom is reputed for the ease of use of its products and its rate of innovation using technology to help consumers in their daily lives. Since creating the portable navigation category and expanding to sports wearables we have sold over 84 million consumer devices.

SPORTS

We believe that technology can play a key role in helping people to be healthy and live longer. TomTom sets out to motivate consumers to move more giving them relevant data and a compelling experience.

We help our customers reach their fitness goals and encourage them to go out and explore. This is the philosophy driving the innovations of our wearable product range and its mobile ecosystem. We were the first to integrate an optical heart-rate monitor into a GPS running watch and to integrate a music player directly into the watch. We have recently launched the world's first fitness tracker to combine body composition analysis with step, sleep and all day heart-rate tracking, right from the wrist – answering the age-old question 'Is what I am doing, doing anything for me?'. We have also launched an adventurer watch specially aimed at our customers enjoying the great outdoors, either trail running, skiing or snowboarding.

2.5.2

2.5.3

Marking a significant milestone for the Consumer business, TomTom announced the launch of the TomTom Sports sub-brand and an advertising campaign supporting TomTom Sports in 2016. The TomTom Sports brand caters to the needs of audiences ranging from those that are taking their first step down the road, to those that are stepping over the starting line of their first marathon. We are claiming a unique space in the world of sports. TomTom Sports is not here to shout at you to beat the impossible, be unstoppable, go harder, tougher, longer, deeper, rougher or sweatier. We want to help people where they need it most. Right at the beginning, where excuses often beat conviction. We want to be the brand that inspires people to Get Going and take that first step, no matter how big or small their effort might be, time and time again.

Underlying the TomTom Sports product portfolio, and forming the future of our audience engagement, is the TomTom Sports app. This ecosystem has been entirely re-engineered and re-designed for 2017, allowing our brand to provide not just data about users' activities, but insights that will help them to Get Going.

In a world where wearables collect personal data every second, privacy matters more than ever before. At TomTom, we take privacy very seriously and we have worked hard to make our privacy practices the benchmark - we believe that sound data privacy will be one of the key differentiating factors also for wearable brands. We are proud to lead the way, ensuring the data remains secure. More about our promise to protect data is stated in the Privacy and data governance section of this Annual Report.

Drive

The Drive business helps people to move and discover new ways of getting to their destination.

Our four product line portfolio includes navigation devices for car, two wheels, large vehicles and mobile devices. We include innovation that ensures customers buying TomTom's products enjoy a feeling of priority driving, no matter their destination.

TomTom's award-winning car navigation devices provide a priority driving experience blending the best of TomTom technologies, including sophisticated routing and award-winning traffic information. Some of our newest products include Wi-Fi® updates and deliver advanced smartphone integration, allowing for a safer drive with minimal interaction with smartphones.

In the two wheel category, TomTom's products for motorcycles – the TomTom Rider - continue to deliver value and excitement to our customers. Thrilling trips across Europe are now pre-installed in our devices, enhancing overall product experience. TomTom's desire to expand the addressable market moved us into the scooter market by launching the TomTom Vio.

TomTom's market share in the large vehicles market keeps growing. In 2016, TomTom launched the widest and strongest line-up of its TomTom Trucker range ever. That allowed for recruitment of new channel partners and geographic expansion to North America.

TomTom focused on improving the mobile apps and services. My Drive app saw large improvements during 2016, including the capability to download and transfer scenic routes to navigation devices via TomTom's cloud. TomTom also generates a significant business with our subscription-based navigation app GO Mobile. Our app for Android continues to receive multiple awards and excellent consumer ratings, and we are working on the iOS app to replicate the success of the Android version.

2.5.4

2.6 Strategic priorities

Through our technology capabilities, we are well positioned to capture growth opportunities across our Automotive & Licensing, Telematics and Consumer businesses. Many of our growth opportunities are driven by big industry trends, including Wearables, Connected Car, Autonomous Driving and Smart City.

2.6.1

Within the Automotive & Licensing business we aim to grow through technology leadership in mapmaking information systems, traffic and navigation software. To achieve leadership we will invest in automation, modularity and industry standard interfaces. We are targeting new growth opportunities in ADAS and Autonomous Driving, investing in our HD map and RoadDNA technologies.

Our Telematics business strategy is to continue to profitably grow our fleet management business and to diversify to other Connected Car services such as vehicle leasing. We expect to increase our share as the leader in a fragmented European market. We will capitalise on our scale by investing in our telematics technology, to offer a superior service and client devices and to provide APIs for complementary partner products. We will continue to invest in our Telematics service platform to strengthen our leadership position in fleet management, to enable diversification into other Connected Car services, and to grow our partner ecosystem.

Following a diversification strategy, our Consumer business has established its Sports category and will invest for further growth, with the ambition of being the number one sports wearable brand in Europe. As well as having growth potential, the Sports category is a good fit with the TomTom brand and capabilities in smart devices with associated cloud-based web applications and smartphone apps. Our traditional portable navigation category is still important and we invest at the right level to make the most of a declining category. We will exploit niche growth opportunities in Drive such as our Bridge driver terminals for businesses, which take advantage of our device platform and capabilities.


2.6.2