Navx

#8- Why did Nokia buy Navteq

We have already talked about Nokia buying Navteq for $8.1 billion, a spotlight on the navigation industry that was quickly followed by a bidding war for Tele Atlas, Navteq's only global rival in mapmaking.

For a GPS maker, it's important to be in a good relationship with its map provider and better to have it in-house :) But this is also important for a cell phone maker if location-based services are one of the cornerstones of its strategy.

Nokia already showed in 2006 its objective to become an integrated player in the navigation market by acquiring  Gate5, a European navigation software supplier. With the recent acquisition of Navteq, we understand that Nokia wants to move from a phone-making model to a service-making model by offering consumers maps, routing, navigation and other location-based applications on its mobile devices.

As recently announced here :  Nokia would target pedestrians, leave the car-navigation market to others, and work on maps improvements with the help of communities : think about hundreds of millions of Nokia phone users worldwide keeping the maps up-to-date. It's a big media-capture device which means people can capture content, put it on the map and share it with others. 

We already discussed it here,  Berg Insight  expects a high growth on the US and European markets for maps and navigation in handsets. Mobile subscribers accessing maps and downloading routes using their mobile handsets in Europe and the USA are expected to grow from 4 million users in 2007 to 43 million users in 2012 !

Clearly, Nokia which was looking for new sources of revenues as the cell phone industry matures is on its way to focus on handset-based mapping, turn-by-turn navigation services and connected devices with Gate5 and Navteq. 

NAVX & TeleAtlas in prime time on TF1

Last Friday, the French TV channel TF1 mentioned two innovations for GPS: the gas price service by NAVX (presented by Florent Boutellier), which allows users to select the least expensive gas station, and the 3D maps from TeleAtlas (presented by Stéphane Lagresle).

TF1 23/11/2007
envoyé par jcherbo

#7-How will the GPS phone market evolve in the next 3 years ?

The two principal functions of mobile phones have been picture taking and music playing. Today the satellite navigation is expected to be the must-have feature: research suggests that 25% of mobile phones will have GPS by 2010. 

In the United States, a large number of mobile phones have integrated GPS chips for security reasons, to pinpoint user's location when they are in danger. But theses chips can also be the support of various location based services. Nokia and Motorola have already introduced their navigation enabled handset for the mass market, so far the sells going well : apparently PNDs don't have a negative impact on GPS enabled phones growth rate (we have talked about it here) and we expect that growth to continue in the next years. 

The most obvious service of GPS enabled phones is turn-by-turn navigation, which provides directions simply by allowing users to type a destination.Satellites locate the GPS-enabled device and map the device's location to the destination.A map can be then generated on the user's screen, along with text based directions. So the key factor for GPS phones is to keep the map up to date : See #8-Why did Nokia buy Navteq :-)

But location based services of mobile phones will soon go far beyond navigation :

• Mobile search will become a standard feature on all handsets over the next three years.
• Mobile Social Networking will be a killer application (social networking : "finding friends and meeting new ones", receiving alerts when a friend is close by, ect)
• Geotagging: Internet and maps will allow people to upload pictures, videos and sound clips recorded with their phones that are automatically encoded with the location where the picture was taken or the recording was made 
• Mobile Geo-advertising : according Telephia's report, mobile video revenues in Q1 2007 increased 198% over the previous year, and mobile video users had the best ad recall of any mobile data user group. With LBS, mobile ads will be adopted on a large scale.

#6- Will smartphones cannibalize PNDs ?

That's the usual question about convergence. Will the smartphone be the swiss army knife, leaving PNDs in the dust and grabing the automotive market ? Well, our most regular readers know that we do not quite believe in convergence, but rather in divergence.

Basically, we expect smartphones and PNDs to co-exist for quite some time without having a major negative impact on PND's growth rate. Because :

• PNDs have the best form factor for car navigation because of their larger screens, ease of use, reduced number of clics to activate any navigation function (try to configure your GPS phone navigator while driving ... or rather DON'T TRY).

• While PNDs are excellent for car navigation, smartphones are great for pedestrians. We expect the two products to diverge also in terms of maps. Pedestrians need more information about altitude, stairs, what's going on around a position, etc, while car drivers need to know the speed limit, the traffic congestion, gas prices, speedcams locations, etc.

• Three years ago, high resolution camera phones didn't really cannibalise digital camera sales. Sales of digital cameras have been quite strong recently, and it's common for consumers to have both of them. We think that it would be similar  for PNDs and smartphones, one will have both devices.

So, to summarize: GPS phones are a new category of product, aimed at a pedestrian usage. They will complement PNDs, which will be focused on car navigation, and sooner or later be connected as well.

Strikes: the French working attitude

You may have heard that France is currently paralyzed by strikes. Subway and railway employees, joined tomorrow by civil servants, have been on strike for a week now, jamming the entire transportation system and leaving millions of people freezing on train stations' platforms.
But NAVX can't be stopped that easily :-) ! We bought bicycles to our employees, rented hotel rooms, organized car pooling and insured that everybody could be at work and on time !

#5 -When will we see connected PNDs and are they relevant ?

It's just now ! The world’s first portable navigation devices with integrated GPRS modem and SIM cards was the TomTom Go 715, a product targeting companies with fleets of cars. Dash is launching an upgraded version of its solution in the US. Now, with the new XL HD, TomTom is targeting the mass market, with live traffic information. And be sure that connectivity is on the horizon for other brands of PNDs as well.

A connected device will allow users not only to receive updated and personalised information, but also to transmit data back to the server and share them.

This functionnality opens an avenue of services: 

• Live traffic information and floating car data
• Map updates (such as TomTom's Mapshare)
  
• Internet browsing and local search
• Peer-to-Peer/ Community interactions
• Dynamic content push & pull (such as gas prices, speedcams, parking availability, etc)
  
• Buddy location
• Live location-based services
• etc

In october 2006, NAVX tested a service on a TomTom 910 which provided live information on parking spots. We had to connect the 910 to a GPRS phone through a bluetooth connection. Imagine what we can do now that a TomTom XL HD provides a seamless connectivity :-) !

NAVX at Tech Tour

NAVX was at the European Tech Tour Web & Communities Summit this week, presenting to a group of key venture capitalists and media.

Great place, great organization, thanks in particular to
Yann Mauchamp, the executive director of the event. And an opportunity to network with 25 other promising start-ups !

Garmin leaves the bidding war ?

Breaking news from Le Monde :
Garmin announced it wouldn't bid higher for TeleAtlas: with this announcement TomTom shares jumped more than 8%  while Tele Atlas shares lost 9% on the Amsterdam exchanges.

memo : We had announced it here, TomTom offered 30€ a share, valuing Tele Atlas at around 2.9 billion euro, easily topping the 24.5€ per share bid made on Oct. 31 by its U.S. rival Garmin which valued the company at 2.3 billion euro. But apparently Garmin leaves the battle, without raising the offer.

technorati tags: TomTom Teleatlas Garmin 

Google's Android not an iPhone

The conference press on monday didn't add much on what we knew about Google's plans for the mobile phone market: Android, a collection of software for mobile phones. It's a nice development for Google for the future of mobile phones that can turn into little computers with a better Internet experience on mobile phones. (Apple Iphone sold 1.4 million in three months, remember ?)

What is Google dreaming about ? That android would be the foundation for many new phones and will create an entirely new mobile experience for users, with new applications and new capabilities. (See here). So it sounds like Google is focused more on mainstream phones than the high end of the smartphone market where the iPhone plays.

Another news: We can stop calling the thing the Gphone. There is no Gphone (see the video below). There is Android.

technorati tags: Google Android Iphone Apple

TomTom ONE HD - Networked Traffic Solution

Big News : TomTom has announced its new premium traffic service in Netherlands with the new TomTom XL HD, a connected GPS that will provide more descriptive and better traffic information.

TomTom’s new High Definition Traffic uses anonymously collected and processed traffic data generated by the movement patterns of mobile phones in cars, via Vodafone’s Dutch GSM network and third party information provided by traffic authorities and road operators.

Users can receive up to five times more traffic updates so they are better informed about the traffic situation on their route and receive more accurate travel and arrival times.

The service will be in cooperation with Vodaphone, and will carry a 10 Euro (~$15) per month subscription fee. 

ps. The TomTom ONE XL HD Traffic is available in shops in the Netherlands in the course of November 2007. The price  is 399 Euro.Third party information provided by traffic authorities and road operators

Find more info on TomTom Nederland.

technorati tags: TomTom premium traffic service 

Navx on Direct8

Watch Navx "Gas Prices" on Direct8 : Interested ? Click here.

direct

Web 2.0 in Berlin

#4 - What are the key strategic concerns of PND players for the next 3-5 years ?

We continue our review of the 10 most critical questions. Here are the concerns we think PND players will face in the near future :

As the navigation market will continue to grow, PND manufacturers will need to address both first-time buyers and replacement buyers.

We think a key strategic objective will be therefore to offer inexpensive and basic devices so that first-time buyers can access car navigation.

Now, the second key objective is to get customers to keep buying the same brand, and ideally a higher-priced product. So, PND manufacturers will have to propose attractive multi-fonctions PNDs. But they will also have to give good reasons to buy them.

This leads to the third objective, and probably the most important: increase the stickiness of their products. As we expect PNDs to be connected (see #1), we believe PND players need to invest in content and community services to create a pipeline of services based on real-time traffic information,  gas prices information, enriched points of interests, user-generated content.

As we see today with the current Tomtom/Garmin battle for TeleAtlas, content is king. And beyond maps, there is an increasing need for relevant, personalized, enriched information right in your GPS.

TomTom bids about €2.9 billion for Tele Atlas

TomTom turns up the heat in the battle for digital mapmake Tele Atlas by raising its proposed takeover offer to trump a competing offer from  Garmin !

TomTom said it will offer 30€ a share, valuing Tele Atlas at around 2.9 billion euro, easily topping the 24.5€ per share bid made on Oct. 31 by its U.S. rival Garmin which valued the company at 2.3 billion euro.

We expect now Garmin to come back with an even higher offer and Tomtom to reach 35€.

So it's getting really hot : Let's wait for Garmin's answer !!

#3 - Why does TomTom want to buy TeleAtlas ?

When TomTom announced last July that it has agreed to acquire Tele Atlas for $2.77 billion, the navigation industry praised the bold move and wondered about the rational behind. Is it an offensive move or rather a defensive one ? We believe there are four good reasons:

• Mapshare: TomTom believes in leveraging its huge community to update maps with its mapshare technology. The only way to be allowed to change the maps is actually... to own them. TomTom then hope to generate the most updated maps ever.
• Growth: one of the most promising markets for the next 5 years are also the less covered by map providers: Latin America and South Asia. Buying a map provider would provide TomTom an opportunity to speed up coverage.
• Content: with declining hardware margins and battles on price, GPS manufacturers are eager to generate recurring revenues and improve differenciation. Content will be the king to achieve these goals: dynamic points of interests and user-generated content should soon complement the current content offer from Navteq and TeleAtlas. And acquiring one of them is a way to move up the value chain.
• New market: GPS phones are about to hit the market, each of them with a map and a navigator. Owning the map, TomTom will grab a substantial piece of the market.

This move has now triggered a battle between TomTom and Garmin. The latter (as reported here) is now making an agressive counter offer. We should know this week how TomTom will react. And if the original move was offensive, TomTom is clearly now on the defensive side !

technorati tags: TomTom TeleAtlas GPS mapshare navigation

Ignite session tonight !

Today at 6 pm, NAVX will give a presentation at the Web 2.0 Ignite session in Berlin.

We will talk about our experience with Flex, and the reasons why we chose this promising technology to build our web front-end.
See you there !

French TV M6 presents NAVX "gas prices" service

Le prix du carburant
envoyé par jcherbo

#2 - Will the current dominant PND players be threatened by new entrants ?

The European market is today dominated by 3 manufacturers: TomTom (48% of sales), Garmin (19%) and Mitac (16%) with its two brands Mio and Navman. In the US, Garmin leads (52%), followed by Magellan (16%) and TomTom (20%).

So, basically, the worldwide PND market is controlled by 4 manufacturers. Is there any chance they could be threatened by new entrants ? Two types of companies could be envisionned: big consumer electronics companies (Philips, LG, Sony, etc) and major car-entertainment suppliers (Pioneer, Becker, Alpine, etc).

Well, here is our guess:

1. Consumer Electronics companies : they tried to enter the market, in particular Sony and Philips. The latter already stopped its PND operations. Even if they have the power and brand necessary to penetrate the market, we don't think they will be willing to in the short-medium term. However, keep an eye on Nav N Go. They probably have the best independent navigation software on the market, and are agressively pushing it towards CE companies of all sorts !
2. Car-entertainment suppliers: their products are costly, although well integrated in the dash board. However, PND manufacturers are already succesfully entering the car-fitted market. TomTom signed an agreement with Toyota to provide GPS to the Yaris, and acquired Siemens VDO's navigation arm. We expect PND manufacturers to work more closely with the automotive industry and improve the integration with the car.

So, is the real threat coming from GPS phones ? We'll look at that question very soon. Keep in touch !