Business Outlook — Whither Personal Navigation? - GPS World


Navigation is hands-down the top dog in location-based services. 2006 sales of portable nav systems in the United States finished somewhere north of 2.5 million, more than double 2005 sales. Betting that the past is prelude to the future, many analysts project a similarly rosy increase in 2007 for personal navigation devices (PNDs).
North American Sales of Portable Naviagaion DevicesWhile navigation is a location-based service, it differs from the other services such as tracking, mobile resource management, mobile commerce, social networking, and so on, because it enables or enhances many of these other services. Therefore, navigation should increase demand for these other services. But the tail sometimes wags the dog — especially if it is a long tail.
One of the more intriguing location-based services is social networking. This has the explosive growth potential of text messaging or MySpace. Especially interesting is that it involves a demographic group not strongly represented in navigation system sales. One big reason: price. This year, PND prices, on average, seem to have dropped several hundred dollars. But $499 or even $399 is still a big bite for most 18–25 year olds.
Text messaging is a crude form of social networking, but better solutions are on the way. The New York Times recently highlighted two new social networking services worth noting: Boost Mobile, Sprint's pay-as-you-go subsidiary, and Loopt's (yes, Loopt) recently unveiled Boost Loopt. Earlier, SK Telecom, the top Korean cellular carrier, and Earthlink teamed up to introduce Helio.
The idea of social networking is not new. In Helio's implementation, one of your circle of friends or associates can map out your location (along with the locations of up to 25 other friends), assuming you want to be seen. Boost's Loopt offers its members the option of continually tracking each other at designated intervals.
North American Factory-Installed Vehicle Navigaion System SalesSome obvious concerns arise, such as stalking, perhaps by a spurned group member, or by someone finding a lost phone, or someone hacking into the system. Still, these possibilities will not likely deter the service's adoption if the perceived value is high enough, at least in this demographic group.
Price poses a bigger problem. Helio's Drift phone runs $225, along with a service plan. Boost has something of advantage. Its service is only $2.29 per month. It also requires a phone, but its phones are pay-as-you-go, which generally are cheaper. Unlike text messaging, there is no interoperability between carriers; the entire group of friends would have to have the same brand of phone. Text messaging began the same way, but interoperability is more problematical with GPS. Phone companies are very protective of location for a number of reasons, not the least of which is potential liability.
If social networking gets off the ground in a big way, it could fuel demand for navigation, or more precisely, directions. After all, directions could be very useful for finding your friends, as are directions to gas stations with lower prices. In navigation, there is no killer app, just death by a thousands cuts. As Wired editor Chris Anderson puts it, "the future of business is selling less of more."
By this logic, Nokia is on the right track with its plan to provide GPS, maps, and text directions for "free" on its cell phones (Nokia has taken to calling its high-end phones like the 95 "multimedia computers," with some justification). Someone has to pay for those maps and directions, but it's not inconceivable that it could very well be the merchant eager to give directions to the store — turn-by-turn, text-to-speech directions even.
Navigation in the future shapes up as a battle between PNDs and high-end, tricked-out, very smart phones. The PNDs that survive will have to take on the characteristics of the phones. Maybe, in the end, everything will be a diminutive multimedia computer. It's possible that's what convinced Philips Electronics not to enter the PND market after all.
– Mike Sheldrick Editor, LBS Insider e-newsletter