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Wedbush: Trouble looming for mobile navigation companies

Although hardly a surprise, since Google maps now comes with turn by turn directions for free and Nokia and Microsoft is giving away their navigation for free, the company you may not want to work for lately are the ones in the Personal Navigation Device market.  Companies like Garmin, TomTom and Navman have seen their business being upended in the last few years, with a mix of positive (increasingly cars and other products come with navigation systems built in) with the negative (your product is essentially being given away for free).  Even if you are a car manufacturer today, you have to wonder whether the value add is to put navigation in, or simply have an elegant device holder for your phone, and rather just integrate bluetooth for better sound and add a charger.  So there is no surprise that Wedbush predicts severe trouble for the market in their recent report:

Worldwide PND Shipments and ASPs 2005-2013E

(Source: IDC August 2009 and Wedbush Securities)

The strategies taken by the companies differ. Garmin focuses on in-dash (cars, boat, fitness equipment), while TomTom focuses on services. Personally I believe more in TomTom’s strategy, although it will require continous innovation in tems of what they provide.  Yes, I admit I forked over EUR10 to have Homer Simpson tell me where to drive, and while innovative, they will need to think way beyond what they actually provide as a company. The voice addition borders humor and entertainment, and as a PND company, you are perhaps not in the direction finding business, but in the travel companion business, whatever those needs may be (lessons can certainly be learned from GM’s OnStar here).  This will be an exciting space to watch from a corporate strategy perspective, and for sure, only the ones able to adapt quickly will come out of this well.

Posted in The Business of Mobile.

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