GPS Marketers Navigate in Tougher Market as Mobile Apps Threaten to Elbow Them Aside

TomTom, Garmin Take Sharp Turn by Launching Phone-Friendly Products

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YORK, Pa. (AdAge.com) -- The GPS market is getting lost as consumers increasingly add navigation capabilities to their mobile phones.

Wary of being made redundant by popular navigational apps and add-ons for phones, dashboard-device marketers TomTom and Garmin are coming out with new products that play into, rather than fight, the trend. TomTom has introduced a turn-by-turn iPhone app and is about to launch a car kit that includes an adjustable iPhone mount, microphone and speaker integration. Garmin is rolling out a navigational phone of its own. And both are working on next-generation devices that can offer services such as real-time traffic and social-media mapping.

SHOW THE WAY: GPS fights off phones.
SHOW THE WAY: GPS fights off phones.
A new Forrester Research report finds that GPS-enabled phones will surpass built-in car navigation next year and overtake standalone units by 2013 to become the majority choice. Currently, about 17% of adults in North America own a standalone device; 4% own a built-in system; 3% own a phone navigation-system; and 4% own two or more of the navigation solutions.

According to the Consumer Electronics Association, the standalone GPS market is estimated to top $2.8 billion in 2009, down 32% from $3.7 billion in 2008. Part of the reason, though, may be price cuts -- the average price for a standalone GPS device also dropped about 30% from $244 in 2008 to $188 in 2009.

Survival
The shift to phones is about simplicity, said Charles Golvin, who authored the Forrester study. They have better and more-varied price options, are easier to carry along, and feature location-based apps for pedestrians. However, he is also quick to point out that even though it may lose the majority standing, the portable-navigation-device market will survive -- and can, in fact, thrive.

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"There are plenty of people with PND and built-in systems who think they are a better system and will stick with them," he said. "And in fact, they're right, they are better systems. Generally speaking, purpose-built devices are better."

For example, one inherent advantage is the fact that consumers who use navigation on their mobile phones have to contend with what to do if the phone rings in mid-direction.

"Even though PNDs and in-car navigation systems often provide a better user experience than handset-based navigation services, new handset models designed especially for navigation have closed the gap considerably," said Berg Insight analyst Andre Malm. "Rapid developments in handset user interfaces, software integration and hardware performance will make handsets even more competitive in the future," he wrote in a recent report.

Mr. Malm estimates there are now more than 150 million turn-by-turn navigation devices worldwide, comprised of 90 million PNDs; 35 million car built-ins; and 28 million navigation-enabled phones.

$5 limit
IPhone users in particular seem to be leading the mobile-phone navigation charge. Recent research from Compete found that 55% of iPhone owners use navigation and/or GPS at least a few times a week, compared with just 31% of the total smartphone population. But while people are using navigation on their phones, they're not downloading many apps (only 22% use something other than the preloaded Google Maps) and they're not willing to pay much more than $5 for them, said Danielle Nohe, director-consumer technologies at Compete.

TomTom's turn-by-turn navigational software launched this summer in the form of iPhone apps that cost around $100. The app downloads all the maps and direction sets to the phone, essentially equipping the iPhone as a TomTom whether you have a phone connection or not. The car kit, coming this month, is priced at $120 and includes an adjustable iPhone mount, microphone, speaker integration for directions (and music), and its own built-in GPS for a boosted signal. TomTom created a one-minute video in June highlighting the iPhone app and the kit's benefits, but has not yet launched any formal advertising. TomTom handles ads in-house; media is done by Mediaedge:cia.

Meanwhile, competitor Garmin has partnered with consumer-electronics maker Asus to create the nuviphone G60, a combination navigation and phone device launched Oct. 4 exclusively with AT&T. The nuviphone costs $299 with two-year contract and does allow calls while navigating. An ad campaign, created in-house, includes TV and online and began running last weekend on what the company identified in a press release as "most major networks."

Both marketers, however, will also continue to make standalone devices and are concentrating on standing out from the mobile-phone pack.

Both, for instance, have come out with a device (for use now only in the Netherlands), that gives real-time traffic data -- so-called HD traffic -- that for instance, allows users to find another route while stuck in traffic. Local search, timely point-of-interest information and social-media mapping are other features expected in future products.

"I think Garmin and TomTom will be successful going forward because they're innovating and differentiating, and they've got the software and skills and knowledge with maps that the phone makers don't," Mr. Golvin said. "I'm not sure about all the other [PND] brands though. I think it's going to be a pretty tough road for them."

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