Navx

Boom predicted for GPS-enabled handsets

Analysts have predicted that  the number of GPS-enabled handsets is set to more than triple during the next five years and as we discussed here (#7-How will the GPS phone market evolve in the next 3 years), they expect an abundance of new models supporting GPS from all major brands this year.

According to the latest report of Berg Insight, there would be 560 million handsets using the Global Positioning System worldwide in 2012, compared with 175 million units in 2007. The report also says that while there were roughly 5 million GPS-enabled handsets in Europe in 2007, the figure would reach 90 million in 2012.

In other words, GPS is going to be a must-have in all high-end handsets and location based services of mobile phones will soon go far beyond navigation. The availability of accurate position data in mobile devices creates exciting new opportunities for developers of local search, navigation and social networking applications and content providers like NAVX.

technorati tags: GPS-enabled handsets GPS phone market

Navigon's online platform: Fresh

Navigon has announced the future launch of its content and services platform called  Navigon Fresh. (Available in the spring in North America). The objectif is to provide users exclusive content and services, and support Navigon's user community with updated information.

We have already talked about the key strategic concerns of PND players here. Content is king for the navigation market: It's a way to keep customers and attract new customers.

technorati tags: navigon fresh content gps 

#9-Will LBS services finally take off, how and on which platform ?

We have heard of Location-Based Services (LBS) for years, but the market never really took off. At NAVX, we think the time is now ripe for LBS : GPS chips are now cheap and precise, geolocalisation is widespread thanks to TomTom and its competitors, maps are commonly used on the web thanks to Google Earth and its mash-ups, car navigation is a killer app, and ... GPS phones are about to hit the European market.

Location-Based Services are about finding a person, a place, an information or a thing relative to the user’s current location.  And we can imagine the following services :

• Mobile search
• Dynamic content push & pull (such as gas prices, speedcams, parking availability, etc)
• Mobile reservation/ booking
• Peer-to-Peer/ Community interactions
• Security Packages (knowing about the whereabouts and safety of spouses, children, relatives, and even pets)
• Live traffic information and floating car data
• Location Based Gaming Market
• Mobile Social Networking  (buddy location..etc)
• Geotagging  
• Mobile Geo-advertising
• etc

On which platforms these services could be used ? Specifically on cell phones, providing navigation beyond the vehicle, allowing access to various LBS apps, with the largest potential addressible market in terms of price/fonctionality (remember that 80 millions GPS phones will be sold in Europe in 2009 according to Berg Insight). But also on connected PNDs, which will allow users not only to receive updated and personalised information in their car, but also to transmit data back to the server and share them.

We think there are three key factors for LBS to be a success :

• Focus on specific customer needs, even if they look like a niche (security, finding your pals, get alerted, etc)
• Launch lots of applications and test them on customers (no one knows which one will really get traction)
• Integrate LBS seamlessly in the phones and PNDs

#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. 

#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.

#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 :-) !

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 

#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 !!