Could TomTom Provide the Roadmap to Success for Apple?
Much has been written about Apple’s $135 billion in cash and the desire of some shareholders to see part of it returned. Technology companies that thrive in their heyday often face the challenges of a post-glory period when their product ceases to appeal or the market has moved on. Nokia and Blackberry (formally RIM) are recent examples of this, and Motorola is another within the mobile space.
At times such as this, a company’s cash reserve is the only thing that allows for continued investment in R&D; it enables them to try to hit the next product cycle and provides coverage for a cash flow shortfall should the company no longer have the volume to generate profits. Having cash on the balance sheet also provides a company with the opportunity to invest, through acquisition, in new technology and intellectual property to ensure enhanced offerings.
In the case of Apple, the recent debacle over the new Apple Maps app on their iPhone 5 emphasizes the fact that when they’re looking to create a new experience, Apple is better off using in-house software. Dutch navigation company, TomTom, which provides the map software for Apple, has recently been reported to be struggling as its hardware sales begin to falter. For the last couple of years the company has focused on selling their map software but they haven’t had the financial resources necessary to successfully compete against the deep pockets of Google or Nokia (Navteq).
TomTom could, however, be an ideal acquisition candidate for Apple. Within their portfolio they could provide the inspirational innovation to blend hardware capabilities with location, content (iTunes) and contextual information to create new and engaging consumer experiences that enhance the digital life of the consumer. In reality, this mapping capability is already within the portfolio of Google and Microsoft, their main rivals in the operating system space.