Going places: Sales of portable navigation devices rising

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By Matt NaumanMercury News
Article Launched: 05/25/2007 01:34:04 AM PDT
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When Nicole Testani got something in the mail earlier this year from AAA that advertised a portable navigation device for $599, she started thinking about the technology.
When she saw a Magellan T2200 at Costco in early April for $299, she tossed it into her cart.
"I wanted to buy one because we travel frequently and I just thought it would be a good idea," said Testani, who works in human resources at Analog Devices in San Jose. "I usually print out driving directions on Mapquest or Google Maps, but having something `live' in the car is great."
Consumers, their hands full of cell phones and their ears full of iPods, have found their new must-have gadget.
Sales of portable navigation devices are skyrocketing, thanks to their ease of use right out of the box and falling prices. Last year, especially the holiday season, was a good one for the makers of these mobile maps: About 3.5 million of them were sold in the United States. That prompted analysts to forecast 5 million sales this year.
But Nelson Chan, the new chief executive of Santa Clara-based Magellan - one of the top navigation brands along with Garmin, TomTom and a few others - said he's even heard whispers of 8 million sales this year.
"What we're seeing right now, because of the convergence of technology, feature set, ease of use and, of course, price point, this market is really taking off," said Chan, who joined Magellan late last year from Milpitas

computer-memory-products maker SanDisk, where he started that company's retail business.
Chan, whose goal with Magellan is to increase its product portfolio and leverage its brand name, concedes that price is driving the market. A few years ago, he says, the devices cost $1,000. Now they're selling for as low as $199.
Indeed, when TomTom introduced its One device in August, its list price was $499. Today, it's down to $299.
"U.S. drivers are realizing the necessity of GPS in their everyday lives faster than predicted," said Joanne Aliber, TomTom's senior product manager.
And although most customers still buy portable navigation devices via the big-box electronic chains such as Best Buy and Circuit City, the lower price points have moved them into warehouse stores and mass merchandisers.
`Mainstream product'
"When you're getting into places like Costco and Wal-Mart, you've kind of arrived in terms of being a mainstream product," Chan said.
James Keh, who owns three navigation-only stores in Silicon Valley, marvels at the explosion in interest in the devices.
A decade ago, he'd take early navigation units made by Rockwell to car shows and other events, and people wouldn't know what they were. "They thought it was a television, a video player," he said. "They'd say, `We'll never buy one because it's a gimmick, a toy.'"
But Keh, who has added storefronts in Cupertino and Palo Alto to his original Auto Nav 2000 Plus store in San Jose, had faith. "I felt that thinking is going to change. It's just like a cell phone, in my mind. It's something that's needed."
Thilo Koslowski, vice president of automotive at Gartner, a research and consulting firm, sees much more potential for growth, but also pitfalls and increasing competition affecting the navigation industry.
The average consumer might take a weekend drive twice a month, or 24 times a year, when a basic navigation unit might come in handy, he said. "The value proposition per usage is not that high," he said.
Both he and Magellan's Chan say it's going to take more than Point A-to-Point B directions and a listing of nearby gas stations, ATM machines or restaurants to make people feel that in-car navigation is a necessity.
Real-time traffic information, which is becoming more available, is one such service. Chan mentions "dynamic information" such as stock quotes, sports scores and news headlines as another avenue to continued growth. High-definition devices are coming, too.
"The key is how do we get people to literally turn their thing on every single day when they get in their car just like they turn on their radio," he said.
While the mobile navigation market is booming, Koslowski expects continued, but slower, growth in embedded units that automakers put in luxury cars and family vehicles such as minivans and big sport-utilities. Often standard equipment on higher-priced cars, from a $30,760 Acura TSX to a $99,900 Mercedes-Benz CL550, these units often are an $1,800 to $2,200 option on other vehicles.
Unlike navigation units that come installed in a new car, most portable ones can be operated while the car is moving, and that raises some safety concerns.
"The fact is, even when you're a mature driver, these things are hugely distracting," said Rosemary Shahan, with Consumers for Auto Reliability and Safety in Sacramento. "Your job when you're driving cars is to drive the car."
State Sen. Joe Simitian, D-Palo Alto, who pushed for California's mandatory usage of hands-free cell phone that takes effect in 2008 and sponsored legislation that bans drivers under 18 from using their cell phones and text-messaging while driving, said the growing use of portable navigation devices hasn't gotten Sacramento's attention - yet.
"As the industry booms, that's going to be a concern," he said.
GPS competition
There's also a push to add GPS to cell phones. And that's a serious threat to those selling portable navigation devices, said Koslowski, who is testing a Nokia smart-phone with an integrated GPS antenna.
Chan sees it differently. Just as cell phones with digital cameras and cell phones with MP3 players didn't kill the digital-camera and digital-music industries, cell phones with navigation won't kill the portable-navigation market, he said.
Testani, who lives in Morgan Hill, says she's been using her portable navigation device more often than she thought she would. She likes the symbols that show nearby restaurants.
On a recent trip to Los Angeles with her husband, the navigation unit detoured them around an Interstate 5 traffic jam, using Magellan's "route exclusion" feature.
"It was great just to be moving and not have to sit in the traffic," she said.
Contact Matt Nauman at mnauman@mercurynews