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  • iSuppli: Does Google’s PND App Signal the Swan Song of Dedicated Devices?

    For European Portable Navigation Device (PND) manufacturer TomTom and U.S.-based Garmin, Oct. 29, 2009 will indeed be remembered as the day everything changed.

    “Google’s announcement that it plans to launch turn-by-turn navigation on the Android platform would be enough of a headache in itself, but giving it away for free? Sound the alarm!,” says Richard Robinson, iSuppli analyst.

    There has to be some sympathy for PND and navigation device vendors that have spent the last year redefining their businesses in the light of the economic shock that crunched the world economy beginning in the fourth quarter of 2008.

    “But clearly, the announcement from Google is a bit like arriving at work one day to find one of the biggest brands in the world has moved in next door, and is offering a version of your product to consumers—for free,” Robinson says.

    According to him, what is concerning is that TomTom and other EU-based navigation providers are heavily dependant on the success of their hardware and software products, while for Google, this product will represent yet another very small cog in a much more complex machine that is being built to increase the footfall to their paid advertising.

    “Ironically – he continues – the hang over that awaits existing navigation providers is a slice of history repeating itself. Back in 2004, when TomTom released the first PND into the European market, heads were bowed; particularly in the boardrooms of the Japanese electronics manufacturers that dominated the in-dash navigation market.”

    He claims Japanese Tier-1 companies such as Alpine, Panasonic and Pioneer, as well as Harman Becker in Europe, were simply not able to counter the threat from the much cheaper and more flexible portable device sector that was taking hold in Europe. “While the rest of the world looked on, these new kids on the block cleaned up during the next two to three years, with triple-digit growth the norm for all PND suppliers.”

    “So here we are again, but this time the game has changed for good. Clearly, the take-it-or-leave-it nature of free application downloads will do nothing to boost the image of navigation as a smart product. So it’s no surprise that both TomTom and Garmin’s shares have been badly hit since the announcement on October 28th,” Robinson adds.

    iSuppli analyst thinks both companies during 2009 have indeed staged good recoveries in their fortunes—and share prices—but this is move by Google such a disrupter, that it is difficult to see how these device vendors can add real value in the face of the launch of a free app. “No doubt the initial experience will be less rich compared to a dedicated device, but this will change. And it’s not as though Google will be overloaded with complaints about a free app”.

    According to Robinson, the question now is: Will the PND platform become a footnote in history—a one-hit-wonder?

    “Clearly the PND vendors would like us to think there is more in the locker, but it’s difficult to see the next steps for this dedicated device, particularly in the maturing markets of Europe and the United States,” he concludes.

  • Application Stores as a Great Opportunity for Mobile Navigation


    Application stores are presenting a new, significant channel for the promotion and distribution of mobile applications in EMEA. In recent report Canalys analyzes how important will this channel become for navigation applications, and what opportunities does it present.

    “Turn-by-turn navigation is one of the few types of mobile application that consumers have shown a willingness to pay a valuable premium for. In part, this is because these solutions replicate the dedicated, portable navigation device (PND) proposition that consumers are used to associating with a price tag of up to €250 – and even more for some specialist niche products,” says Canalys.

    But, encouraged by existing application stores, there is an expectation that the applications found in app stores are cheap or even free: certainly Apple has seen mostly free applications downloaded from its store.

    Navigation offerings therefore need to be priced competitively to succeed, while preserving sufficient margins for developers.

    Canalys anticipates that as perpetual solution prices inevitably fall, vendors will look to subscription business models, at least for additional premium content, to deliver higher returns from their customers.

    “Vendors must also watch closely how free or very cheap basic navigation applications, such as Nav4All, AndNav2 and Roadee, perform. Though lacking brand recognition and usually based on community-generated maps of questionable and varying quality, such as those from the OpenStreetMap project, consumer expectations of these solutions are low and relatively simple to exceed,” analytics say.

    Canalys claims if these applications can give a user experience good enough for basic use cases, reviews and ratings and viral promotion could see them taking customers away from established vendors.

    App Marketplace

    Application stores, meanwhile, are already establishing themselves as consumers’ first port of call when looking for mobile applications or device personalisation and enhancement options.

    According to the report, technological and optimisation barriers to mass-market uptake of phone-based navigation in EMEA are continually being eroded. Of the 26.1 million smart phones that shipped in EMEA in H1 2009, 22.6 million (86.7%) had application-accessible integrated GPS chipsets, compared with just 36.0% for the same period in 2008.

    In H1 2009, 42.3% of GPS-integrated smart phones that shipped in EMEA used a touch-screen as the primary input method. Meanwhile, Nokia continues to bundle free periods of turn-by-turn navigation with the vast majority of its S60 smart phones and to offer navigation-focused devices or SKUs, such as the 6710 Navigator and the 5800 Navigation edition, respectively.

    Other handset vendors, such as HTC and Samsung, as well as some operators, have also now finally started to not just pre-install, but actively promote navigation solutions, usually powered by third-party software.

    “All this has helped create a market environment, certainly in the developed markets of Europe, where consumers are now well aware that they can use mobile phones for satellite navigation,” says Canalys.

    Combined with growth in mobile application marketplaces and the accompanying consumer interest in browsing and discovering applications, the EMEA market for phonebased navigation offers exciting growth potential.

    Canalys forecasts that the user base for phone-based navigation in EMEA will grow by 40% year-on-year to 6.3 million in 2009, and by 54% to 9.7 million in 2010.

    How to exploit the new opportunity?

    With June’s iPhone OS 3.0 launch, Apple allowed turn-by-turn navigation applications to be developed for the iPhone and sold via the App Store. Navigon quickly got its MobileNavigator application into the store, beating TomTom, which had already shown its application at Apple’s Worldwide Developer Conference, analyzes Canalys.

    Navigon evidently saw a first-mover advantage and quickly became a leading application on the German and UK stores, where its brand is established, priced at €99.99 for European map coverage, or €50 to €70 for a single country or group of countries.

    The Navigon application, and the similarly priced TomTom solution that followed just over a month later, were positioned as premium applications at price points comparable to entry-level PNDs.

    “ALK, however, took a different approach, quickly placing its perpetually licensed CoPilot Live applications in the store at the much more competitive, affordable prices of €33.99 for specific groups of European countries (eg, the German-speaking DACH countries or Benelux), or €79.99 for Europe-wide coverage.”

    The research says ALK, with a considerably less well-known brand than TomTom, has managed to become a strong contender among turn-by-turn apps on the App Store through being competitive, and now has the highest grossing paid-for application in the UK.

    TomTom’s approach, meanwhile, has been less hurried, for better or worse, and has relied on its brand strength to deliver results and elevate it above a need to enter into a price war. It is also focused on delivering a PNDlike experience as far as possible.

  • TomTom Presents Car Kit for iPhone

    Biz.News.com reporters navigated to TomTom’s stand at IFA 2009, where Sarah Schweiger, PR Manager for TomTom, gave them a brief introduction to the company: their main markets, competitors and challenges as well as newly released products, including long-expected car kit for iPhone scheduled to ship in the U.S. in October.

  • Will Smartphones Be The Death of PNDs?

    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.