Finding NNG

By bne IntelliNews May 27, 2015

Kester Eddy in Budapest -


In the display case in the airy entrance hall of NNG's Budapest headquarters, perhaps 30 awards, trophies and industry honours attest to the professional achievements of this fast-growing Hungarian software designer. Yet surprisingly for a company that supplies the essence of satellite navigation systems for seven of the world's largest automotive makers, the names of carmakers are largely absent from the array. “We operate below the water in many senses,” says Peter Balogh, the self-confessed IT geek who founded Nav N Go in 2004, later renamed NNG.

NNG supplies its trademark iGo navigation application primarily to hardware manufacturers – so-called tier-one suppliers in the industry – who in turn supply the dashboard innards to carmakers. But bound by non-disclosure agreements, equipment suppliers are typically silent when it comes to naming any car marques using their products. (Throughout a one-hour interview, Balogh steadfastly avoids naming any individual OEM – a carmaker – as using NNG products.)

Such lack of publicity adds to the mystery of NNG's success: since turning to focus on the automotive sector in 2008, it has trebled its workforce to 760 employees, who now use over 30 different map data sources to supply satnav services covering 197 countries.

Revenues in 2013 (the latest publicly available) hit €57m, and are growing by “between 40-50% each year”, according to Balogh. This performance led to NNG winning gold and bronze “Stevie Awards” for fastest-growing companies in Europe and North America respectively. “NNG is probably the most successful Hungarian start-up bar none. It has been ignored not only by you, but by the entire, stupid domestic media who are [otherwise] eager to produce Hungarian success stories,” Peter Zaboji, a Budapest-based start-up guru scolded this correspondent earlier this year.

Direct comparisons within the sector are difficult however, because many of NNG's rivals provide both hardware and software together. “We don't know if we are the market leader [in the satnav sector] or not: what we say is that we are one of the leading companies in the field. As we see it, we are likely the biggest independent software supplier, but this limits our bragging rights,” Balogh says.

Twists and turns

It has not always been a smooth ride. Founded in 2004, Nav N Go initially focused on affordable personal navigation devices (PNDs), a strategy which gave the company dizzying success until 2008. But the global crisis, combined with market saturation and some sloppy financial management, saw the need for rapid downsizing. “We had to lay off 80 people: some had even been recruited, but not yet started work. It was as ugly as hell. People went home crying,” Balogh says.

The crisis also called for a strategic rethink: after a day behind locked doors, management opted to apply their know-how in personal satnav software to the auto sector (and, by way of a plan B, to mobile phones). For NNG, the logic was inescapable: while navigation devices at that time were an expensive, €3,000 optional add-on for selected marques, technological advances would reduce costs until they could became a built-in feature for all cars. 'Navigation for All' became the NNG mantra. 

Yet auto-makers poo-poo'd the idea. “They said: nah, this isn't going to happen. We even found one who had figures to show the costs [of satnavs] would rise over time,” Balogh recalls.

Then there was the question of finance. Introducing new technology to the auto industry typically takes three years – a long time to wait for payback and keep the company running from the income of the shrinking PND revenue stream. So whatever the merits of the idea, in such an environment the barriers to putting it into practice proved formidable. “You cannot just knock on the door and talk to the right guy at Renault,” he says.

Indeed, it proved almost impossible to ignite interest from any tier-one supplier. So much so, that the solution finally came via unorthodox methods: a small team from a tier-one supplier worked in their spare time to build a prototype system that, when finished, they presented first to their own management, and then to automakers.

From the start, NNG set out to identify what Balogh terms “the killer features” that would give the prototype iGO navigation system a compelling business case. To their surprise, the team discovered that, while carmakers typically launched new models globally, the navigation systems were designed and fitted by different teams in every continent. “Nobody offered a global platform! The car was global, but what goes into the dash was local,” he says.

This approach had significant cost implications. “Each of these partnerships, since it's a three-year project with a few dozen people working on each, costs millions of euros, just from the project management aspect,” Balogh explains.

Armed with the prototype, the suppliers approached the automakers: it proved an idea whose time had come. Two carmakers (one of which is widely believed to be Toyota) latched onto the idea, and in 2011 began launching cars with affordable, built-in navigation systems running on NNG software. The rest, as they say, is history: with the power of a large tier-one supplier speaking to automakers, orders for NNG software surged. The company plans to take on another 200 employees this year alone, and is actively seeking to expand its R&D base beyond Hungary, where 90% of its current workforce is deployed.

“Within 10 years, all cars will have connectivity, connected to the cloud. That brings a lot of new changes in this industry, in everything that it does,” Balogh says, adding: "And huge opportunities."

Notice: Undefined index: social in /var/www/html/application/views/scripts/index/article.phtml on line 259

Related Articles

UK demands for EU reform provoke fury in Visegrad

bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more

Erste claims Hungary is breaking peace deal with banks

bne IntelliNews - Hungary will breach its February agreement with Erste Group if it makes the planned reduction in the bank tax conditional on increased lending, the Austrian lender's CEO ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more