Rand McNally & Co. can take heart that in a recent independent survey it shared honors with digital upstart MapQuest Inc. as the nation’s most-recognized map brand. In fact, consumers would put more trust in a Rand McNally portable map gadget than one made by leading navigation devicemakers.
Now the bad news: It’s not easy to even find digital navigation gadgets with Rand McNally maps inside.
The venerable Skokie-based mapmaker remains a big force in the print map business and is carving out new markets with specialty atlases, but Rand McNally, late to the game when digital maps took off years ago, remains a bit player on navigation’s electronic frontier. While print maps won’t go away anytime soon, growth in the map business — and there should be a lot of it — is on the digital side, from Web sites to cell phones.
“You can make a living off selling printed maps, and you can do that for a long time,” said Henry Poirot, a Colorado-based map industry consultant. “But can you get really rich? No.”
Rand McNally Chief Executive Robert Apatoff is confident that digital mapping will still become a significant part of the company’s business. Industry analysts are less optimistic about Rand McNally’s digital prospects, though they say the cell phone market presents the firm with a good opportunity.
Rand McNally is one of the Chicago-area’s oldest companies, founded in 1856 as a print shop by William Rand. Andrew McNally joined 12 years later, and the two made a living printing railroad tickets and timetables. In 1872, Rand McNally produced its first map.
The business stayed in the McNally family until 1997, when it was sold to a New York investment group. About that time, the Internet was beginning to revolutionize mapping. But Rand McNally fell behind in the new era, filing for bankruptcy in 2003 and emerging with Los Angeles-based private equity firm Leonard Green & Partners as its new majority owner.
Rand McNally wouldn’t disclose its revenues or specify its number of workers. However, a Dun & Bradstreet report said late last year that the company employed 636, including 262 at its Skokie headquarters. The workforce has shrunk since Apatoff, Northbrook-based Allstate Corp.’s former chief marketing officer, took over in 2003, when about 350 were employed in Skokie alone.
But the company has experienced sales growth since then, Apatoff said. The “vast majority” of its revenues are from printed maps, he said.
Rand McNally’s Road Atlas, first published in 1924, is still considered the nation’s top-selling atlas, the gold standard of its category. The firm also publishes several regional atlases, and last year launched the Ride Atlas of North America, a venture with Harley-Davidson Inc.
The book, which costs $35, includes everything from pre-planned trips to lists of Harley dealerships and state-by-state motorcycle laws.
“It has been very well received and has been a very popular product,” said Bob Klein, a spokesman for Milwaukee-based Harley-Davidson.
This spring, Rand McNally put out its second themed atlas, the Ultimate NASCAR Road Trip Guide, aimed at auto racing fans.
Atlases aren’t easily replaceable by the Web or a cell phone. They provide a big-picture mapping experience, the kind particularly amenable to vacation planning, that’s hard to replicate.
Fold-out city street maps are another story. Although they also give a bigger picture, people often use them simply for directions. Nowadays, of course, those directions can be had for free on the Internet on such sites as MapQuest.
Apatoff acknowledges that the Web has eaten into printed street map sales. But Rand McNally also has a Web site that offers free directions, as well as paid navigation services. The site, set to be revamped this fall, got high marks in a 2005 Chicago Tribune review of map sites. And in May, it ranked fourth in traffic volume of 20 map sites tracked by ComScore Media Metrix.
But it was a very distant fourth with 1,545 unique visitors during the month. MapQuest was first with 49,912, while Yahoo and Google were next, with 30,075 and 27,866, respectively.
All four sites have one thing in common: They essentially customize maps made by Chicago-based Navteq Corp., one of two firms that dominate digital map production.
“In terms of digital, Navteq is the new version of Rand McNally,” said map consultant Poirot.
Navteq shows how fast the digital business is growing: From 2002 through 2006, its annual sales rose an average 38 percent. The company expects its workforce to swell to 1,000 from 550 in the next five years, prompting a move announced earlier this month to a larger headquarters in the Loop.
One of Navteq and the mapping industry’s key growth areas is the personal navigation device, or PND, market.
Sales of such devices have soared as the prices have dropped. From January through April of this year, the average retail cost of a PND was $417, down from $719 one year ago, according to NPD Group, a market researcher. Sales jumped 303 percent year over year during that time, NPD said.
Kansas-based Garmin Ltd., which has a marquee store on Michigan Avenue, is the personal navigation device leader, with 50 percent market share, while TomTom NV, a European company, is second with 24 percent, according to NPD.
Rand McNally waded into the market last year with the Navigator, a $500 device made through a partnership with software and hardware vendors. The Navigator landed on some holiday gadget gift lists, but it had limited distribution and sales.
“We wanted to stick our toe in the water,” Apatoff said.
He said the company plans more such devices, and he believes it can carve out 15 percent of the market. His rationale: the strength of the firm’s brand.
“We have the name people have been paying for for 150 years,” Apatoff said.
But NPD consumer electronics analyst Ross Rubin said it will be a tall order for Apatoff to achieve his personal navigation device goal.
A “whole host” of big electronics players have jumped into the PND market as sales soared, and some have already exited because the field has gotten so crowded, Rubin said.
The mobile phone market should offer Rand McNally more opportunity, said Rubin and other analysts. Unlike the PND market, it’s in its infancy, without deeply ensconced market leaders.
“And the target market is massive,” Rubin said, much bigger than the PND market. Indeed, the cell phone is one of the planet’s most ubiquitous electronic devices, with about one billion sold per year.
It will be a tough road for Rand McNally, though.
First, the good news: In a survey, consulting firm Frost & Sullivan found that Rand McNally and MapQuest were the most recognized map brands; 85 percent of consumers knew of them. The survey included the names of several PND-makers, print and digital mapmakers, though not Yahoo or Google.
In that same survey, consumers were asked which company they would trust the most to provide a GPS navigation device, which could be a PND or a phone. Rand McNally placed third, besting such established PND-makers as TomTom and Magellan.
“We believe [Rand McNally’s] brand carries weight, even in digital,” said Brent Iadarola, a wireless industry analyst at Frost & Sullivan.
Rand McNally has two phone services, including StreetFinder, which costs $4.49 per month and helps consumers get directions as they would online. A more advanced offering, also called Navigator, isn’t on the market yet, but it won a second-place award for innovation earlier this year at the wireless industry’s annual convention.
For its cell phone applications, Rand McNally partners with TeleCommunication Systems Inc., a wireless data company. Their products are available through Sprint, one of two big U.S. carriers heavily promoting navigation; Verizon is the other.
On the down side, Sprint also has its own navigation service, which is produced by a wireless data firm but carries the Sprint brand. Verizon offers only a service that carries its own brand. When carriers do their own branded service, they can potentially make more money, Iadarola said.
That’s because they split revenue with just the wireless data firm that powers their service. With an independently branded service such as Rand McNally’s, a cut of revenue must also go the owner of the brand, he said.
Still, the phone navigation market is so young and highly fragmented that it’s difficult to pick winners and losers, Iadarola said. “This is just the start of this.”
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mhughlett@tribune.com
