Real-Time Traffic Device To Add Markets

By Amy Gilroy On Dec 4 2006 - 8:00am

TrafficGauge plans to expand sales of its eponymous real-time traffic device to a fourth market, Chicago, in the first half.

The handheld devices offer real-time traffic views of Seattle, San Francisco, and Los Angeles. Each city gets its own dedicated device, which displays an "always on" electronic map with a birds-eye view of major highways and current traffic flow.

The devices, which retail for $80, do not provide turn-by-turn driving instructions or automatic re-routing.

TrafficGauge founder/CEO Ryan Peterson estimates the company has more subscribers than other real-time traffic services such as ClearChannel or XM even though his service is available only in a few cities. The other services, with a greater footprint, have attracted subscribers from only about 1 percent of GPS owners, he said.

The TrafficGauge devices display color-coded traffic in slow, medium and heavy conditions. The map is fixed on the device, as viewed on 4.5-inch diagonal screen that is refreshed about every four minutes.

A device sold in Los Angeles will not show San Francisco traffic, and if you travel with your Los Angeles device to New York, it still shows Los Angeles traffic.

Traffic reports for the TrafficGauge are gathered from road sensors monitored by the Department of Transportation and other state agencies. Traffic cameras are too unreliable because of interference from weather and other conditions, Peterson claimed.

The company takes the state's traffic data, processes it and broadcasts it over an FM subcarrier but doesn't use the industry-standard digital RDS (Radio Data System) technology.

If left on, the devices can run for four months on two AA batteries.

Despite the growing competition from GPS devices, Peterson envisions his device gaining market presence.

"The way I see us fitting in is that our product is always going to cost a fraction of the cost of GPS with traffic." In addition, he said, "I view the TrafficGauge as an iPod that does one thing very well." Other traffic services take several minutes to "boot up" on a GPS device, he noted.

Peterson says the service enjoys a high renewal rate but declined to disclose the service's churn rate.

Five years down the road, he said he can foresee a receiver-only version of the TrafficGauge appearing as a small add-on dongle to a Garmin or Magellan GPS device. It also has the advantage of not requiring a large antenna.

TrafficGauge is augmenting its retail distribution and will add regional Costco stores in November to its list of retailers, which includes Car Toys, Al & Ed's, Fry's, and more than half the car dealers in the areas where it is available (or a total of nore than 100 car dealers). The company also sells through the American Automobile Association and garners seasonal shelf space in Nordstroms and Macy's, said Peterson.

Retail margins for the device are about 40 percent, and the monthly service charge to consumers is $7.

The company also offers a real time traffic service that can be delivered to cellular phones in more than a dozen cities, but because the road sensors are sporadically deployed in some of the cities, the traffic coverage is not as complete as it is in TrafficGauge's initial locations.

Areas covered in the cellphone service include Chicago, Denver, Houston, Louisville, Los Angeles, Milwaukee, Minneapolis/St. Paul, Orange County, Calif.; Phoenix, Portland, Sacramento, Calif.; Salt Lake City, San Diego, Seattle, San Francisco, and California's San Fernando Valley.

TrafficGauge also recently announced that it will be working with University of Washington and the Washington State Department of Transportation in a federally funded study to test whether use of its devices actually improves traffic.

The state and the university are purchasing about $500,000 worth of new TrafficGauge devices for the test. Prior to the announcement, TrafficGauge said it would see a 70 percent increase in sales this year over 2005.

Peterson launched the first TrafficGauge device in Seattle in 2003.

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