The form factor war in the navigation space is heating up in early 2011, as rising sales of tablets and smart phones with integrated global positioning system (GPS) capability cut into demand growth for dedicated portable navigation devices (PNDs), according to new research from IHS iSuppli.
Form Factor War
At the 2011 Consumer Electronics Show (CES) this month in Las Vegas, a slew of vendors showcased a plethora of tablets designed to serve as mobile navigation devices. Tablets represent yet another platform that can host location based services (LBS) and navigation applications, providing new competition with traditional PNDs.
Many navigation and LBS application vendors already have started porting iPhone iOS apps to the iPad, with some tweaks in graphic resolution and enhanced features. Android app developers also are expected to start porting their smart phone apps to tablets. Many vendors at CES showed how to utilize tablets as in-vehicle infotainment devices with more connectivity and integration solutions.
In order to support fully mobile applications such as navigation, tablet devices must support Wireless Wide Area Networking (WWAN) technology (i.e., 3G, 4G technologies). IHS iSuppli estimates currently that about 80 percent of media tablets shipped include embedded WWAN capability. While the majority of these tablets to date are driven by Apple Inc.’s iPad, the recent influx of Android-based tablets launched at CES—not the least of which were those launched by Verizon in conjunction with their LTE network—are expected to create a two-horse race moving forward, fueling innovation and adoption. There could also be some upside to navigation-capable tablets, driven by the use of Wi-FI-only tablets in conjunction with mobile hotspots. However, IHS iSuppli expects that this configuration will be employed sparingly.
IHS iSuppli research forecasts that more than 135 million smart phones will be sold with navigation capability in 2011. This number could be higher than actual smart phone navigation users and will expand the annual total available market (TAM) of navigation software sales.
Navigation-enabled mobile phones in use will exceed 148 million units worldwide in 2011 and will reach 269.3 million in 2013.
Among the users of these navigation-enabled platforms, the off-board navigation user share is estimated at about 40 percent in 2010 and will start declining in 2012 to give way to on-board/hybrid navigation users. For mobile navigation software/services and solution providers, Google will start dominating the smart phone off-board navigation market with its ad-based business model, while Nokia’s preloaded Ovi Maps will be a leader in the smart phone onboard navigation markets. Meanwhile, Apple’s iPhone will keep hosting more and more third-party navigation application vendors.
PNDs Set for Decline
The PND market had been hot until early 2009 when the economic crisis hit. Clearly, consumers expressed a greater preference for lower-cost PND solutions compared to expensive in-vehicle factory or aftermarket solutions.
The PND now is in the mature phase of its life cycle and will enter into a period of decline starting 2012, with the worldwide PND market is expected to inch up 1.2 percent in 2011 and reach its peak. However, from 2012 on, the global PND market will start to shrink, despite continued growth in China and in other regions such as Eastern Europe, Latin American, Middle East, and Africa.
The consolidation of the PND market will accelerate in 2011, with the two biggest-volume players—TomTom and Garmin—accounting for a combined market share of more than 60 percent worldwide, and more than 70 percent in Europe, the Middle East and Africa (EMEA), and the Americas. The majority of PND buyers in the developed Western countries will purchase TomTom and Garmin products, as the pricing of their models has become more affordable.
Impact on Automotive
The smart phone is among the most exciting segments of the high-tech industry today, and already is making a tremendous impact on many industries, including the infotainment segment of the automotive business.
Specialty devices such as PNDs are losing ground, while connected multi-functional computing platforms are gaining momentum and providing more use cases for the in-vehicle environment. Automotive OEMs should keep abreast of the popular mass market mobile platforms and continue to strive for compatibility of such devices with in-vehicle systems. Such brought-in consumer electronics devices already can host more apps and services for users, and smart phone-based platforms in the future can be extended as the basis for the hardware/software architecture of headunits.
OEMs also should look at the business models in portable device services. The subscription model is facing challenges, while premium services with added value are utilizing non-traditional business models such as “freemium” services. Many smart phone apps are using in-app purchases of premium features, while free features also deliver a significant value for users. In order to increase the return on investment in high-quality free features, it is important to figure out how to attract critical mass to deliver ads.
Finally, voice-activated human machine interfaces are gaining importance with the increased usage of mobile devices in the car. Bluetooth for service content rendering as well as voice commands with onboard and off-board VR systems and speech-to-text are technologies that OEMs must accommodate for in-vehicle mobile device use.
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