Portable navigation device vendors are facing increased competition, both from consumer electronics vendors and from thin-client specialized vendors such as TeleNav and Wayfinder, according to ABI Research principal analyst Dan Benjamin.
Key to both product segmentation and revenue opportunity are network-connected services, according to Benjamin. “Over the past few years, higher-end models have offered features such as text-to-speech and real-time traffic information. But as even these features are incorporated into the most inexpensive products by generic device manufacturers, connectivity is becoming the last bastion of feature differentiation,” he said.
"By next year, simple one-way traffic information over satellite radio will be found even on the lowest-priced portable navigation devices sold for less than $300. Thin-client players will be able to advertise perpetually updated maps and POI, and lower up-front costs due to reduced storage and processing needs. We expect on-board portable navigation vendors to follow TomTom and offer more connectivity, but with a focus on premium traffic information and location database updates."
Benjamin added that firms like Philips and Sony “could be in for a rude market awakening,” since established navigation firms like Magellan “have been forced to clear out their products through discounters,” and Navman is up for sale. “If they come in expecting to compete on brand instead of price or features, I wouldn't be terribly optimistic,” he said. “This market is comparable to the audio player market before the iPod. Many had products, but it was the service component in iTunes that separated Apple's offering from the pack."
ABI's study “Consumer Navigation Systems and Devices: The Changing Dynamics of Portable, Converged, OEM, and Aftermarket Navigation," is part of the firm’s Automotive Infotainment Research Service.