More than a third of Russian consumers are interested in a smartphone-based navigation device – while nearly 63 per cent are willing to pay more than euro 4 per month for a vehicle tracking service based on a GPS-enabled smartphone.
These are among the findings of research by Frost & Sullivan which also showed that global positioning system (GPS)-enabled smartphone technology is gaining ground over traditional portable navigation devices (PND) in the Russian navigation and telematics market.
So much so that in 2009, the smartphone-based navigation market has already exceeded 350,000 units sold in Russia, while the PND market has failed to register even half that amount.
The analysts conclude that the results indicate that firms must define a clear strategy – positioning products, services and business models around the ever-converging GPS-enabled mobile handsets market in order to expand telematics and navigation into the Russian market.
The report says that Russian consumers’ desirability and willingness to pay for connected navigation, location-based services and features, finds that the Russian navigation market saw unit sales of 0.45 million in 2008, and will likely reach 2.0 million in 2012.
This shift is attributable to exponential growth in the GPS-enabled, smartphone-based navigation market and to steady growth in the PND market.
Praveen Chandrasekar, Frost & Sullivan programme manager, said: "Handset vendors like HTC, Nokia, and Apple are propelling the navigation market in a new direction by pushing more GPS-enabled smartphones into the Russian market.
"In 2008 the balance shifted more towards the handsets-enabled navigation market rather than PNDs."
Chandrasekar said this trend clearly shows that this market needs to be addressed with a smartphone-based portfolio in order to succeed.
Eight out of ten current owners of navigation systems in Russia want to purchase another navigation system within six months.
Of these, 49 per cent still prefer a PND, but a growing 30 per cent favour a smartphone-based navigation system.
Russian consumers are willing to pay upwards of euro 100 for a smartphone-based navigation solution.
In light of the current recession, this solution could clearly prove to be the low-cost killer alternative.
The economic crisis has put a damper in consumer spending habits in Russia. Although Russian consumers indicate that they are willing to pay upwards of euro 300 for a navigation device, they might not necessarily be ready to do so in this economic climate.
Chandrasekar said the recession has come at the "wrong time".
"The navigation market, driven by GPS- enabled smartphones and PND, was on an upswing.
"However, consumers are increasingly cautious and this might slowdown market development."