Trender Research™

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Are We There Yet? Navigation Devices Break Out and Drive Home in Droves

Navigation devices are having another break-out year. By all accounts, this consumer electronic product category hit the mainstream, with wide adoption by many different demographics. Thanks to competition and price cuts, aggressive advertising, and greater understanding and acceptance by consumers, global sales of personal navigation devices (PNDs) grew to over 29 million units in 2007 (ABI Research). It seems like nav devices are also popular gift ideas.

We had a chance to meet with many of the leading with many of the PND vendors. Some of our Trenders have shared their first-hand experiences with their own navigation devices in their blogs. This topic will also be the subject of an upcoming study by Trender Research, which will incorporate input by the vendors as well. Our goal was to get a feel for the future direction of this market and to better understand how the various players differentiate themselves. As always, we tried to separate the “techno-speak” from those features and benefits most meaningful to the everyday consumer.

First up on our journey, we met with the company that provides the core technology for most PND vendors--- NAVTEQ. Most people don’t realize that most of the map and related technology for PNDs is licensed from NAVTEQ. “What we do around the map, according to the standards of the automotive industry, is very rigorous,” said NAVTEQ Director of Marketing and Business Development Robert Gourdine. “Accuracy is what we bank on.” Not only do they provide very accurate maps, but increasingly also the points of interest (POI in industry-speak) that bring the maps to life and add to their utility. GPS POI’s include restaurants and gas stations and in some cases historical sites or special-interest information such as the best hiking trails in an area.

Gourdine points to Garmin, Magellan, and Tom-Tom as the leaders in the industry. But he says the industry went through a rapid expansion with scores of new vendors large and small introducing new PND offerings, mainly due to the low entry barriers (thanks to NAVTEQ). Over the past year the industry is now contracting again as prices and profit margins shrink and vendors compete through an expensive process of brand building and channel development. In fact, Gourdine points to price and brand as the two biggest means for vendors to differentiate themselves, the third being a mix of intangibles including product features, breadth of product line, reliability, and ease of use, among others. One wild card that seems to be just beginning to attract user adoption is internet connectivity. More on that later.

With that helpful background, we sought out the nav device vendors themselves to hear how they position their products. Mike Sullinger, Sales Manager for Garmin, confirmed most of what we learned from NAVTEQ. Garmin’s booth at CES was very impressive, with a broad range of products. Garmin has devices geared for cars, boats, RVs, and the newest product line: a range of sleek GPS-based wrist watches for serious runners , fitness buffs, and hikers. Sure enough, Sullinger credits breadth of product line for much of Garmin’s success. He also said Garmin’s experience and commitment to learn from customers has allowed them to provide high reliability with very low return rates. But even more important, Sullinger singles out the intuitiveness of Garmin’s products, especially the user interface, as their biggest advantage. “Simply put, our UI is the best.” Other nice capabilities Garmin representatives demonstrated for us include a “bean-bag” mount for those customers that don’t like suction cups on their windshields (and states like California that ban them), a new ultra-slim portable member of the Nuvi product line, and an “MSN Direct” service that uses an FM channel for connectivity.

So how does this story compare to one of Garmin’s chief rivals, Magellan? We asked Bill Strand, Magellan Product Marketing Manager, to find out. “We pack in more features,” said Strand. Among those nifty features is a very beneficial relationship with AAA TourBook. For decades, the leading emergency roadside assistance company has been building its own POIs, and is a trusted resource for suggestions such as hotel and restaurant ratings, price information, and other tidbits helpful to travelers. Similar to Garmin’s spokespeople, Strand also listed ease of set-up and use as the top reason for choosing Magellan. Embracing the fact that no one reads set-up or user guides anymore, Magellan engineers have tried to reduce the number of “clicks” needed to use the device down to one in most cases, and give users the ability to define their own icons. They also allow users to plug in GPS coordinates (latitude/ longitude) directly as an alternative to street-based way points, an increasingly popular method for more savvy users. Like Garmin, some Magellan products support voice commands and test to speech prompts, Bluetooth cell phone integration for dialing and speakerphone, and other advanced features.

One interesting area of future growth for Magellan is a Google Maps service that leverages GPRS (low-bandwidth wireless access technology). Google Maps and the recently announced deal to include Google Local for local search (think local concerts, clubs, etc.) are alternative sources for a POI library that can add value (eventually replace?) the core technology licensed from NAVTEQ. While it remains to be seen how much consumers will be willing to pay for a subscription-based internet service, Magellan’s developments in this area could be a source of differentiation and leadership in a rapidly consolidating industry. Indeed, just last week Magellan announced a partnership with WeatherBug to provide real-time local weather information again leveraging the GPRS-based internet connection. Though other players such as Tom-Tom have similar deals with Google and the like, Magellan is standing firm in its commitment to “pack in features”.

Other companies we met with include Clarion (some of the coolest cars in their booth), Global Navigation, Holux Technology, dmedia, Navigon, and Mio (ironically, in the labyrinth that was this year’s CES, we tried and failed several times to find the TomTom booth). These and other vendors will be included in our upcoming GPS/PND report. It is clear that this interesting product category will continue to evolve and find ways to imbed itself into our daily lives. Because of PNDs unique combination of advanced technology and everyday utility, it is an apt subject for the first in-depth analysis by Trender Research. If you are interested in contributing to, sponsoring, or purchasing this report, please contact me bmahony@trenderresearch.com for more information.

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