Daily ShareChat: Rakon

A "highly significant" development for crystal timing devices and oscillators manufacturer Rakon which emerged from Apple's worldwide developer conference in San Francisco in June was the announcement of a downloadable TomTom application for the iPhone 3G, says Tristan Joll at Goldman Sachs JB Were.

TomTom is one of the major manufacturers of personal navigation devices (PNDs) will 44% of the European market and 19% of the North American market and a major customer of Rakon's which is the largest supplier globally of crystals to the PND industry.

The iPhone application includes map downloads from TomTom's Tele Atlas subsidiary, intelligent routing software and turn-by-turn navigation.

TomTom has also developed a car docking kit for the iPhone, allowing for hands-free calling and charging.

"Combined with the PND-comparable size of the iPhone screen, we believe these items overcome many of the practical barriers which have to date ring-fenced the PND as the in-car navigation technology of choice," Joll says.

"While we do not view this announcement as a death knell for PNDs, we do believe it highlights the inevitable role smart phones will play in the navigation market," he says.

Rakon is already targeting cell phone manufacturers and Joll says its ability to construct higher-specification oscillators at lower cost than competitors is a major source of competitive advantage but it will still face challenges.

BROKER CALL:  Goldman Sachs JB Were rate Rakon (NZX: RAK ) as hold.

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