With cell phones increasingly becoming the nexus of the burgeoning markets for navigation and Location Based Services (LBS), the use of GPS technology in such platforms is set to explode during the coming years, according to iSuppli.

In the fourth quarter of 2011, 79.9 percent of cell phones shipped—amounting to 318.3 million units—will incorporate GPS functionality, up from 56.1 percent in the first quarter of 2009—or 187.8 million units—iSuppli predicts.

The research group says the adoption of GPS in mobile handsets is being driven by smart phones.

“The smart phone is the key product driving the technology industry today—and social networking services and applications spurred by GPS-related features are critical elements in the smart phone market today,” said Dr. Jagdish Rebello, director and principal analyst for iSuppli.

“This is illustrated by Google’s decision to make turn-by-turn navigation, LBS and mobile ads the central features in its bid to take on Apple in the smart phone market, and make up the central pillars of its strategy to increasingly monetize mobile search.”

Rebello said that smartphones are taking over from Portable Navigation Devices (PNDs) as the major platform for navigation. By 2014, usage of navigation-enabled smart phones will exceed that of PNDs.

Furthermore – he continued – the smart phone is likely to generate many innovative LBS apps in the next five years. Apple’s iPhone already has more than 6,000 LBS apps available.

Meanwhile, both Apple and Google are focusing on mobile advertising as a key source of revenue used in association with LBS.

Apple’s new iAd platform, part of the company’s updated iPhone OS 4 operating system, enables the embedding of advertisements into applications, allowing iPhone users to interact with the ad without leaving the app. Similarly, Google in May acquired leading mobile ad provider AdMob.

“Nonetheless, Apple recently upped the ante in the smart phone GPS segment with the addition of a gyroscope to its latest iPhone model. Used in combination with GPS, an accelerometer, a compass and the gyroscope can be used for in indoor navigation with floor accuracy,” as the analysts claim.

iSuppli also sees an increased penetration of embedded GPS in a range of consumer and compute electronic devices by 2014. For example, iSuppli estimates that 18 percent of laptops and 42 percent of portable handheld video game players will have embedded GPS in 2014.

According to the research group, altogether, the boom in mobile handset navigation will benefit suppliers of GPS semiconductors such as Texas Instruments, Broadcom Corp., Infineon Technologies and CSR.

“GPS is not the only embedded connectivity technology that will be increasingly embedded in consumer and compute electronics devices. With the ratification of the Bluetooth 4.0 standard supporting the Bluetooth Low Energy profile, iSuppli expects increased penetration of Bluetooth in wireless mice, keypads and other interface devices for the mobile and desktop market—an area that has been dominated by proprietary technologies,” said Rebello.

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