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Waze is not going to beat Inrix at selling traffic data. People think that Waze is big because it is a consumer application that they have heard of, but Waze is

by ynniv 14y ago

Waze is not going to beat Inrix at selling traffic data. People think that Waze is big because it is a consumer application that they have heard of, but Waze is not a serious player in the B2B traffic data market.

panabee 14y ago
i don't know enough about how inrix generates and maintains its traffic data, but perhaps waze could compete because its data is user-generated (and should be cheaper) ... enabling it to offer data at lower prices to less demanding customers, and therefore reaching out to new customer segments. at the very least, waze need not beat inrix to remain independent but merely capture a portion of the traffic data market. is it incomprehensible that waze couldn't be worth more than $500M? let's do a quick calc. inrix is a private company. we can't use its multiples as a benchmark. let's use garmin and tomtom instead for argument's sake. garmin has a PE ratio of about 15, tomtom's is about 20. if we assume waze gets a similar multiple, it needs about $25M - $33M in earnings. assuming 25% net margins, it needs about $100M - $132M in annual revenue. if the net margins are more like 33%, waze only needs $75M - $99M in annual sales. waze could need even less if it attracts a higher multiple (assuming it offers a disruptive model). i know too little about the traffic market to say if $100M in revenue for a new entrant is feasible. but i'm sure it's not impossible, merely a calculated risk on the part of waze's founders to continue acquiring users and implement the revenue model.
- ynniv 14y ago
  The established market collects data from Android phones, commercial vehicle tracking, some municipal systems, and mobile phone providers. A couple ten million casual end users is two orders of magnitude less than the billions of points Inrix aggregates. They're also almost certainly already covered by either aggregate Android OS or cellular tower data. How valuable is a patchy 2% of the industry standard?

by ynniv 14y ago

panabee 14y ago

i don't know enough about how inrix generates and maintains its traffic data, but perhaps waze could compete because its data is user-generated (and should be cheaper) ... enabling it to offer data at lower prices to less demanding customers, and therefore reaching out to new customer segments. at the very least, waze need not beat inrix to remain independent but merely capture a portion of the traffic data market. is it incomprehensible that waze couldn't be worth more than $500M? let's do a quick calc. inrix is a private company. we can't use its multiples as a benchmark. let's use garmin and tomtom instead for argument's sake. garmin has a PE ratio of about 15, tomtom's is about 20. if we assume waze gets a similar multiple, it needs about $25M - $33M in earnings. assuming 25% net margins, it needs about $100M - $132M in annual revenue. if the net margins are more like 33%, waze only needs $75M - $99M in annual sales. waze could need even less if it attracts a higher multiple (assuming it offers a disruptive model). i know too little about the traffic market to say if $100M in revenue for a new entrant is feasible. but i'm sure it's not impossible, merely a calculated risk on the part of waze's founders to continue acquiring users and implement the revenue model.

ynniv 14y ago
The established market collects data from Android phones, commercial vehicle tracking, some municipal systems, and mobile phone providers. A couple ten million casual end users is two orders of magnitude less than the billions of points Inrix aggregates. They're also almost certainly already covered by either aggregate Android OS or cellular tower data. How valuable is a patchy 2% of the industry standard?