Google commoditizes the TbT navigation market – consider the landscape altered

November 9, 2009  by  

By Phil Magney, vice president, automotive research – iSuppli Corporation

Google just released its first full turn-by-turn Google Maps Navigation application for Android 2.0 handsets.  The impact on the community of telematics, navigation and mobile devices is enormous. This impression assesses the impact of the Google’s announcement on the industry segments. 

There have been free off-board navigation applications before, but not at this scale. Key features from Google include 1) local search query retrieving data from the cloud computing Google search engine, 2) voice activated search, 3) traffic overlay on map, 4) corridor search (search along route), 5) satellite view, and 6) street view. 

The Google application has 3D maps with Satellite and Street View, real-time traffic, as well as text and voice search, the same way users can search on Google’s online portal. This means, a string of words will lead to a list of destination results, as well as a complete sentence. If the user is searching for additional content while on route, the results will be displayed according to the pre-determined route. The user can view traffic with one touch on the traffic alert button on the screen. The application then automatically displays a traffic screen, which displays the traffic ahead on the map.

The following chart highlights the impact and implications of several players in the navigation market:

Impact of Google Maps Navigation (U.S.)


Off-board Navi Providers—most directly threatened by Google

PNDs—further undermines value of standalone PNDs

Wireless Carriers—opportunity to stimulate data plan subscribers

Automotive OEMs—could be a unique opportunity for OEMs and could become the “Killer App”

Automotive Telematics Service Providers—undermines some elements of the traditional TSP model               

Automotive Hardware Suppliers—stimulates the movement toward open systems in the car even more

Google—dominate the mobile search world

Impact on the Mobile Industry

Google’s announcement of a free turn-by-turn navigation application will shake up the navigation and LBS industry from the ground up. While the application will at first be available only on Android 2.0 handsets, the fact that Google Mobile Maps for BlackBerry integrates functions like Street View, Layers, Latitude, Traffic, Wikipedia and the likes is proof that Google Maps Navigation will also eventually come to other smartphones.

iSuppli believes that off-board navigation providers behind the major US carrier navigation brands, such as TeleNav and Networks In Motion, would be impacted the most. With an average $9.99 monthly service fee, these players will lose significant subscribers to the free Google application. Most existing off-board navigation features overlap with what Google provides. Some of the features such as mapping content are even inferior to Google’s, as they still do not support any satellite view or 3D landmarks. Real-time traffic overlaying the route guidance maps is not there, either. The off-board navi players do provide traffic-influenced routing, but it will not take long for Google to add this feature.

Google’s real-time traffic overlay on Google Maps Mobile used to be criticized from premium traffic data providers in terms of its accuracy. However, it would be hard for general consumers to recognize such differences with the data inaccuracy. Traffic data quality not only comes from accuracy but also comes from coverage, where many traffic players lack also. Therefore, general consumers will be more sensitive to an error from a paid app than errors from the free Google app.

However, voice search and corridor search are common in existing off-board navigation apps, and they can claim better local search quality as they are using more aggregated content from organized directory services and geo-coded search data providers, while Google’s search engine is basically an Internet search database. Google may have improved its organization of search results to accommodate TbT navigation functionalities, but Google Maps Mobile used to bring frequent end-user frustration in its irrelevancy of local search results, while premium application providers put more efforts on categorizing relevant local search results for navigation.

Overall, providers of navigation solutions for smartphones will have to re-think their business model. Garmin’s nuviphone, just released in the US, seems like a device made for a different era. Garmin’s premium services like real-time traffic, weather, fuel prices, and White Pages search cost an additional $5 per month. 

Sprint is already offering free navigation, sort of. Sprint Navigation is part of Sprint’s all-you-can eat plans, along with other services. The off-board navigation providers seem to have one option: lower their prices significantly, under $5 per month, along with providing more improved navigation features.

For carriers, they have been happy to provide its subscribers with branded navigation solutions. These applications have been more than profitable for the carrier because of the data plans required to access such applications. Since the free Google app also needs a data plan, they will not have a problem with providing the app, as it is a way for cellular operators to increase the portion of customers that have data plans.

Onboard TbT Navigation App Providers

For PND makers, Google’s announcement means that the heavy pressure put on their devices by GPS enabled handsets has increased exponentially. Onboard navigation application features are usually better than off-board navigation providers, with a better graphic user interface and more detailed mapping content, especially features such as advanced lane guidance. However, the new competing features from Google apps are the satellite views and street views, augmenting roadside reality.

Onboard navigation app vendors do have superior rerouting speed, as the map database resides in the onboard memory. This capability is the major competency of onboard navigation applications over off-board navigation in general. 

But other than such onboard routing and mapping features, the static POI database is an inherent pitfall of onboard navigation applications. Additional costs on top of the initially larger cost of onboard vs. off-board maps are the update or connectivity fees. Many onboard players are adding hybrid features utilizing two-way connectivity of mobile devices for traffic data, local search engine and other real-time LBS data feed. However, the cost of additional hybrid features is on the end-users, and when it comes to local search engines, the devices utilize Google, Yahoo or Microsoft search engines to feed live search query results.

Therefore, despite the initial advantage of onboard features, the remaining competitive strategy against the free Google app for onboard app players is also one: connected navigation but reducing the cost of real-time services. To justify costly download fee of onboard data, the onboard features should include augmented reality in the mapping content like what Google is providing (satellite and street view), while pursuing more ad-sponsored business opportunities to support real-time services in an affordable manner.

Automotive Implications

Meanwhile, the effect on the automotive community is slightly different from that of CE. As always, the auto industry is lagging behind CE, and OEMs and tier one suppliers are just now conceptualizing and prototyping applications for in-vehicle use or for vehicle-centric functions. That is why Google’s announcement has become more of an opportunity for the auto industry than a threat.

Some automakers are already working with Google, like BMW for example, and iSuppli believes this new Google Maps Navigation app could make its way into the vehicle. Adding free off-board navigation into cars could prove as a massive success for the first automaker to do so. On the other hand, automakers might decide that a hybrid on-board plus off-board navigation approach could render a better solution for their customers, which would maintain the revenue stream from high-end infotainment at the same time.

 So where do the tier one suppliers and telematics service providers come into play? The suppliers manufacturing headunits – specifically those with significant reconfigurable LCDs – could see increased demand for a standardized display for vehicles from volume to luxury, while TSPs will see this as an opportunity to shuffle their cards and switch out current technology partners in favor of Google’s superiority. However, there is little doubt that the impact of Google’s application undermines the value proposition of telematics services – at least those related to navigation.


To summarize, Google’s TbT navigation application is significant to the industry value chain. A free application, with features deemed premium by other software providers and PND makers, will not be hurt by potential quality issues and complaints. Even worse for other competitors, Google would be completely fine with not making one cent off this application. Its motive is to dominate the mobile search world, as it does the Internet.

It is inevitable for existing off-board navigation application vendors to lose some of their pie to Google, but Google’s dominance will not happen overnight. The volume for Google to disrupt the market will not happen until there are enough Android phones out there. There are also navigation users that do not want ad-based content.

In the mean time, the threat is that Google will seek more opportunities with non-Android platform providers, too. Apple would be least likely welcome this free app, as it is enjoying a revenue stream from the sales of more than 10 TbT navigation application vendors.

Overall, this event is most beneficial for the end-users, as there will be tremendous efforts from premium market leaders to compete with Google.  Finally, the issue of international expansion will be an interesting one to follow. As of today, the Google Navigation application will be available in the US first. While it is sure that other markets will follow, it is important to note that the feature set for countries around the world will more than likely be different compared to the one released here.

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