Friday, July 23, 2010

Is The GPS Smartphone Killing Navigation Companies?

There's no surprise that GPS navigation companies have gradually been losing out to GPS enabled smartphones that offer so much more location based functionality. Google Maps with voice guidance has really been the pivotal application in the navigation sector. 

As we see smartphone sales surge this summer and beyond, the future is looking bleak for Tom Tom, Garmin and other navigation only providers. Of course they will defend themselves by saying they offer more features, but that's at yet another subscription for the consumer who is tapped out already.  People want to carry only one their pocket or handbag so that whether they are driving or walking or taking the local transport in a big city, they have turn by turn navigation with them.  Also, we all know that keeping a separate device in the car is asking for it to be stolen unless it is a fixture built in to the dashboard.  High margin, value-added services for in-car navigation is probably the only market left for these navigation companies and that is far from mass market. 

Strategy Analytics reports that global smartphone shipments grew 43 percent year-over-year to reach 60 million units in Q2 2010.  And those figures don't yet account for the iPhone 4 effect or the Android EVO and other models that are sold out as soon as supplies come in.  While Tom Tom posted a rise in profits recently, its sales are falling and most significantly in the US, where its share of the navigation market dropped from 23% to 19% in this last 2nd quarter.  That correlates with the fact that the hottest smartphone devices are released in the US market first and then globally.  With location based social media and other apps, as well as mobile marketing adding to the value of owning a smartphone, I believe these navigation companies will eventually be squeezed out of the market.  Smartphones and the iPad may be replacing the laptop for most daily use, so why bother with a separate navigation device?   What's your opinion?  


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