Connected PND Market on the Rise in Western Europe

21 June 2010

The increasing popularity of smart phones has spurred the makers of Portable Navigation Devices (PND) to offer connected PNDs, a market that is expected to expand by a factor 12 from 2009 to 2014 in Western Europe, according to iSuppli Corp.

Shipments of PNDs in Western Europe are set to rise to 4.6 million units in 2014, up from 388,000 in 2009.

As smart phones threaten to take a significant amount of the navigation pie, PND makers—such as the Netherlands-based TomTom and Germany’s Navigon—need to change their business model in order to remain relevant. TomTom, in particular, has gone in a new direction with its latest connected PND—the GO 1000 Live. Since the fall of 2008, TomTom has increased the number of connected PNDs in its portfolio and sells them with its own connected services. A year after the initial launch, TomTom expanded the usability of Live services to cover all European markets where these services are offered, not limiting users to connectivity to their home country alone.

Deliver Relevant Content
TomTom sees real-time connected devices as a logical and necessary continuation of the company’s strategy to increase the amount of relevant information delivered to drivers via TomTom devices, integrating the delivery of traffic information as close to real time as possible. To achieve this, TomTom has introduced Traffic Message Channel (TMC) receivers as well as Subscriber Identification Module (SIM) card-enabled receivers for its own HD Traffic information service. Two-way connectivity enables TomTom to expand on its existing services and to deliver content such as fuel prices, weather and safety camera information in real time to devices.

Just the same, smart phones with unlimited data plans as well as a large variety of applications are able to bring the same information to the end user without requiring the purchase of additional hardware or subscriptions. To counter advancements on mobile handset platforms and provide more flexibility for its own platform, TomTom has released its new WebKit-based platform.

The first device to feature the platform is the GO 1000 Live, with more devices and segments slated to receive the technology in the future. While the device brings with it new features like a capacitive touch screen, the importance for TomTom lies in the establishment of the new platform and the surrounding ecosystem.

Potentially Profitable
Although it is too early to make concrete predictions on how the new TomTom platform and ecosystem will fare, iSuppli believes that this is the correct strategy for the company to pursue.

First, TomTom is the market leader in Europe, and this new platform is an innovative differentiator beyond new hardware or software features.

Second, TomTom is providing its Live services across Europe, either for free as with the new device, or as part of the existing subscription models. This allows users to take advantage of connected services away from home—the location where, arguably, users can benefit the most. Furthermore, mobile data roaming remains expensive in Europe, preventing off-board navigation solutions from being an attractive alternative to a dedicated navigation device.

Third, TomTom noted that its new platform is not limited to the PND form factor but also can be used for in-vehicle systems. The platform, along with its surrounding ecosystem, would allow automotive OEM partners like Renault S.A. or Fiat S.p.A. to bring connectivity to the vehicle as part of the TomTom integration.

Lastly, TomTom stated that this new platform will not be used to replace its existing mobile handset application strategy, in which the company has had—and continues to have—relationships with handset makers like HTC Corp. and Apple Inc., software providers like Microsoft Corp., and carriers like Telefonica/O2.

A Clear Differentiator
TomTom’s announcement of a new platform for its connected PNDs is a clear differentiator and an indication that the company is trying to incorporate current trends surrounding mobile applications into its own product line.

While the lack of detailed information could lead to slow development interest, TomTom can present a unique usage case to its customers and offer connected services throughout Europe at a low entry point price—free for one year with the GO 1000 Live.

The platform also can be used to completely change the way users manage PNDs, allowing them to download additional content, manage subscriptions and eventually also update the map data on their device without having to connect to a home PC. In addition, the new platform can be utilized in vehicles, enabling OEMs to integrate connected services via their TomTom partnership.

At the very least, TomTom has shown that it is thinking hard about how the company can change its product portfolio to stay relevant in the mobile navigation space.

Read More About iSuppli's Portable Devices & Location-Based Services (LBS) >

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