Frost & Sullivan: Possible End of the Road for Dedicated Devices? – Google’s Free Application is here!

November 24, 2009  by  

By Aswin Kumar R, Senior Research Analyst and Praveen Chandrasekhar, Global Program Manager, Automotive and Transportation

Navigation on a mobile phone is fast challenging the traditional user experience from a PND or embedded device. Google’s beta stage free Google Maps Navigation bundled with its Android 2.0 operating system (OS) has made many traditional navigation device manufacturers and map makers sit up and rethink their strategies. Google Maps Navigation packs the extra punch to the existing Google Maps application by offering voice-enabled turn-by-turn navigation, street view and three-dimensional views without any cost or advertisements, exclusive for the Android consumer (for now). And with the Motorola Droid as the first phone to host this feature, this new experience could create several waves in this market.

The move naturally had its after-effects with the stocks of PND giants like TomTom and Garmin crashing by 20% since the announcement was made. With paid navigation being the cash-cow for these companies, Google’s free application could kill their business to a large extent, at least in the U.S region, for in the medium term. Another threat for these companies also comes from Google’s recent announcement to buy mobile advertising network AdMob for $750 million, which further reiterates its interest in creating free applications, including navigation backed up by advertisement-funded business models.

Even though many of the traditional navigation providers like TomTom, Navigon, and Telenav had jumped at the opportunity of offering navigation applications for the iPhone, Google’s advantage lies in the fact that the application is free. Furthermore, as the mapping data are on the Web server, challenges relating to continuously updating the maps are eliminated.

PND Manufacturers are Desperately Seeking New Growth Avenues

With rising volumes and declining revenues in the PND market, PND manufacturers are turning to new segments like services and OEM partnerships. An example of this would be TomTom’s HD traffic service and its work with Renault and Fiat at the OEM level. However, a lot of these services need an extra SIM in the PND and a monthly subscription fee, which makes it a costly proposition for the end consumer interested in accessing these real time services. Furthermore, traditional navigation companies like TomTom, Navigon, and Telenav have realized the power of new business models like application stores and currently offer services for platforms like Apple App store. However, all this also does not seem enough to counter the threat from new concepts like Google Maps Navigation.

Droid with the 3.7” Display Featuring Google Maps Navigation can Change Perceptions

PND manufacturers have long advocated the disadvantages of mobile phone-based navigation devices in the areas of display size, computing capabilities, user experience, and reliability. Devices like the Apple iPhone, Motorola Droid, and HTC Hero come close to a PND in terms of the display, accuracy, and reliability, thereby challenging these traditional notions.

With adequately large enough display size of 3.7 inches, faster processor, car-dock mode and voice-enabled navigation entry, the Droid can very well fit into the role of a PND in the vehicle. Furthermore, the application takes connected devices a step closer to reality by providing traffic information, user ratings or reviews for POI and location sharing through Google’s very own Google Latitude.

Google Maps Navigation Opens Up New Models which are Here to Stay

Navigation as a platform has created the need for context and situation aware information among users. What type of information consumers will demand is still unknown, but several companies – ranging from Web technologies, social networking, to mobile advertising are trying to grab a share of this market. This is where Google has an advantage; in the past few years Google has acquired several companies that provide services in mapping, social networking, news, advertising and Web services.

Google’s success purely lies in its ability to execute its vision of providing a free connected environment for consumers.

Despite Google Maps Navigation being a work-in-progress product, it has already started opening up a number of possible use cases for the automotive environment. As the Continental AutoLinQ platform is developed on the Android OS, the feature will be an immense value addition. This will greatly reduce the inherent map-based (third-party) licensing cost and in turn, reduce the system price. Furthermore, with Android’s open-source architecture and Google’s dominance in the Web 2.0 space, there are enormous possibilities to create new open concepts for even the OEMs. Added to this, NAVTEQ, Nokia, and Magneti Marelli are developing a concept called “Virtual Networking Computer Layer” that can seamlessly integrate smartphones to the vehicle’s display. Free application and such interface concepts can make the smartphone and associated elements like the Android Market or the Apple App store forces to reckon with, and possibly threaten the very existence of hardware-dependent navigation in the form of PNDs.

Google is Making a Sound Statement to the Conventional Players

There is no doubt that with the introduction of Google’s free application, PND suppliers will compete with price reduction techniques to keep their business alive. Though, the user experience of PND is not quite matched by the smartphones, the massive interest and the on-going development in the mobile phone-based solutions could eventually lead to the demise of PND manufacturers, unless they re-look at their strategies as these solutions can be easily adopted globally in the medium term. At the same time, Google is definitely becoming a key player now in this revamped segment

This article is a part of Frost & Sullivan’s current research study evaluating the impact of application stores like Apple app store, Android market and others on the traditional Telematics and infotainment business model. If you are interested in learning more about this study, please email Monika Kwiecinska, Corporate Communications, at, with your full name, company name, and contact details. Upon receipt of the above information, a brief brochure will be e-mailed to you.

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