With the market for personal navigation devices (PNDs) getting tougher and many smartphones now equipped with GPS, what does the future hold for the likes of TomTom and Garmin?

Smartphone.biz-news.com asked Chris Jones, VP and principal analyst with Canalys, what direction mobile navigation was taking.

Blackberry makers RIM recently predicted that GPS navigation solutions on smartphones meant death for sat-nav devices.

The argument was that there is no need for specific devices for navigation when your mobile can do it for you.

This received further credence from research by Strategy Analytics showing mobile navigation to be the primary service for which consumers in the US and Western Europe would be willing to pay a relatively high fee per month compared to other mobile services.

With third quarter results out from both TomTom and Garmin this week – and forecasts being downgraded – the future is looking far from rosy.

Chris Jones, VP and principal analyst with Canalys, said despite continued growth the PND market was tough and profitability was being squeezed as margins became increasingly tight.

Both TomTom and Garmin are expected to benefit from aggressive price promotions to hold – and even increase – their market share at the expense of smaller competitors.

But he said the trend was towards more sales at the lower end of the market than was the case 12 months ago.

Chris Jones, VP and principal analyst, Canalys

This was going to force down margins as big volume sales slipped to lower tier devices.

As well as reducing profitability, Jones said the downside to this was that consumer perception becomes accustomed to GPS prices being lower.

Buyers then become unwilling to pay extra for higher end products.

"The big threat is to the margins and profitability of the PND market," he said. "Some vendors have exited the market and we will see others leave in the future."

Smartphones Challenge PNDs

To add to the PND industry’s woes there was increasing availability of navigation solutions on smartphones and mobile phones.

Apple and Nokia have both done much to promote navigation services, with the Finnish giant leading the charge in Europe.

Nokia expects to sell an estimated 35 million GPS smartphones this year, all equipped with maps and the upgrade option of navigation.

Jones said the challenge for Nokia was to increase the activation rate.

"Nokia has the ability to try and accelerate these rates by making it easier to do," he said. "Prices will come down and the free periods offered will lengthen."

Hope Remains For PNDs

However, Jones said despite the rise of smartphone navigation options, PNDs still had a future.

He believes form is still likely to favor PND’s as the navigation device of choice in cars.

"With smartphones you are looking at a small screen, you can’t touch the device, in many cases there’s no touchscreen or voice activation," he said. "The user interface is not ideal when you are driving.

"The PND is better in the car but the smartphone is one device that is always with you."

Work To Be Done With Smartphones

Out of the car, Jones said more had to be done to inform users about when best to use GPS on smartphones.

He said there wasn’t any great additional cost to add the technology but it had to be well implemented.

"People need to understand when GPS will work and where they are not likely to get a fix," he said. "I think that has a lot to do with education and integrating technology into handsets – more sensitive GPS devices that work deeper indoors because invariably the fix is too long."

Taking five minutes to get a fix – as was the case with some handsets – would do nothing to endear consumers to the technology.

"It’s not good enough to just put GPS in a handset," he said. "It has to work well in small spaces, with the components that are in there."

Jones said he expected all smartphones to come with GPS within three years and it would also begin to appear in more lower spec cell phones.

Whether this, and the continued evolution of smartphone technology, will signal the death of PNDs remains to be seen.

Please let us know your comments on where the mobile navigation market is going.

Subscribe to our Newsletter