PND vs mobile Is landscape shifting?
PNDs remain relevant
The PND and smart phone industries performed very differently over the last 18 months. Despite the economic crisis that began in the second half of 2008, Canalys estimates that total smart phone shipments hit a new peak in 2009 with 166 million units, of which 81% had integrated GPS functionality. By 2013, Canalys expects 96% of smart phones will have integrated GPS. In contrast, the PND market shrunk worldwide last year after growing 18% in 2008. Canalys forecasts the PND market will continue to grow in Asia Pacific and Latin America between 2010 and 2013, but this will do little to offset the rapid declines in Western Europe and North America, which represented 82% of global PND shipments in 2009.
Assessing the development of the mobile phone and PND industries for the last two years, handset vendors have clearly shown they can satisfy consumers’ needs and deliver revolutionary products. The entry of phones into the mobile navigation space has made it hard to promote the idea of using a dedicated device for turn-by- turn navigation to non-PND users, reducing the potential addressable market for PNDs. Hardware and user interface improvements, together with the wider availability of handset-based applications, have substantially changed smart phones’ positioning and increased the popularity of using them as one of the main platforms for turn-by-turn navigation. The market dynamics were further transformed when Google and Nokia announced their respective free turn-by-turn navigation solutions in the last few months.
Conversely, the pace of innovation in PND hardware and software remained relatively slow over the same period. Moreover, PND vendors made various cost-cutting measures and substantially reduced their marketing spend in response to the poor global economic conditions in 2009.This, together with the wider availability of free or cheaper map updates, has provided fewer incentives for existing PND users to upgrade, extending the replacement cycle for this device category. Connected PNDs, which should provide a more revolutionary user experience, failed to impress the mass market and there are few reasons to believe this will change in the near future.
Despite the tangible connection between phones and PNDs, it is vital to highlight that one should not make a direct comparison between the market performances of the two categories. They are different platforms for turn-by-turn navigation, and a sale of an integrated GPS handset does not equate to one less PND being sold. PNDs and handset-based navigation solutions are optimised and much needed for different modes of travel, especially when the market still lacks a single user-friendly device that can truly provide a seamless, multimodal mobile navigation experience.
Existing PND players are now in a much stronger position to defend the pricing and positioning of their products as the market continues to consolidate. They are also in a better position to work closely with their channel partners and devise more effective and mutually beneficial marketing campaigns. PND vendors must continue to deliver more distinct, revolutionary products – both hardware and software – at a much faster pace to attract existing and new customers.
Ongoing, relevant content developments will be vital to provide additional differentiators for PNDs in the future. Leading vendors, such as Garmin and TomTom, already have partnerships with various car manufacturers in different countries and products for both high-end and mass-market car models, but substantial scaling up of these automotive partnerships globally is desperately needed to increase PND penetration. Canalys does not believe the PND market will disappear, but market players will have very tough battles ahead. It will require considerable perseverance and resilience to evolve with the market and stay in the game.
The balance in favor of mobile navigation
The debate pitching PNDs versus handset-based mobile navigation continues unabated. While until about a year ago there was broad consensus about the strong position of PNDs due to their larger screens, optimized navigation user experience, and low price points several recent events have now shifted the balance in favor of mobile navigation.
Firstly the unexpected boom in smartphones with large touch screens since 2009 – initially driven by the iPhone but soon copied by all major handset manufacturers – has brought the user experience of handset-based navigation much closer to the experience offered by PNDs. Secondly, both Nokia and Google have launched free turn-by-turn navigation on their Symbian and Android smartphones, further undermining the value proposition of PNDs. As smartphones continue to attract more users, mobile navigation will soon become a standard feature. Moreover, both Nokia and Google also offer free traffic information, Nokia even adds free city guides.
However, all this does not mean PNDs will disappear. Rather PND vendors will have to reposition their solutions by adopting a more segmented approach to the market. On one hand they will have to continue to develop state of the art, superior, connected PNDs offering a second to none navigation experience. However, obviously this will only attract the high end of the market consisting of high frequency, demanding users for which navigation is a critical function. On the other hand there will still be a market for very cheap basic PNDs addressing the low end of the market consisting of users preferring an out of the box experience which cannot be offered by mobile navigation.
PND vendors can no longer ignore mobile navigation. A look at the latest financial results of both Garmin and TomTom clearly shows the PND market is saturating in developed regions at best – even declining in regions such as Europe. Asia-Pacific and other developing regions still can expect growth but will also see the emergence of mobile navigation.
Finally, a new category of connected multipurpose portable devices such as MIDs will also eat into the PND market, though in this case they will rather assimilate the PND category rather than displace it.
The PND is facing increased competition
There are now more than 175 million turn-by-turn navigation systems worldwide, including about 35 million factory installed and aftermarket in-dash navigation systems, over 100 million Personal Navigation Devices (PNDs) and close to 40 million navigation-enabled mobile handsets with GPS. The PND device category is facing increased competition due to the adoption of handset-based navigation services and greater availability of low cost in-dash navigation systems. Berg Insight forecasts that PND shipments in both Europe and North America will peak around 2011 at roughly 20 million units per annum in each market respectively and decline thereafter. New markets in other parts of the world will partly compensate for the decline in Europe and North America. However, handset-based navigation services are likely to become especially competitive in markets where relatively few users can afford multiple devices.
In the past, PNDs have often provided a better user experience than handset-based navigation services thanks to larger touchscreens and user interfaces optimised for a particular task. However, new handset models such as smartphones with large screens and user interfaces optimised for touch control have closed the gap considerably. Rapid developments in handset user interfaces, software integration and hardware performance will make handsets even more competitive in the future. This will be true also for emerging low cost smartphones that will enable true mass market adoption of mobile applications. Increasing competition from players such as Google and Nokia is also leading to lower prices for handset-based navigation services.
What is more, handset navigation services are well suited as a complement to other solutions, especially for occasional users and those primarily interested in guidance outside the car. Pedestrian navigation features gradually being introduced include improved map data and multimodal navigation, which will enable users to plan routes taking into account all available modes of transportation including trains, busses and walking. Handsets are also better suited for other types of location aware applications beyond navigation that many users can benefit from on a daily basis.
PND vendors are increasingly focusing on new connected PND models and online services. Connected PNDs that make use of wireless connectivity to access dynamic content can improve the value of navigation devices in everyday situations. Features such as local search, traffic flow information and speed camera locations can be useful in both familiar environments as well as on trips to new places. PNDs are likely to be favoured by the minority of users that need navigation frequently and are therefore willing to purchase a dedicated device for this purpose.
Large screen is important
Users will choose to use navigation on those devices which offer a large enough screen to clearly view map and visual instructions, and also wherein they can have an uninterrupted navigation experience. Whichever device can provide users the best experience will win. What is important to note is that, navigation has become an integral part of the smartphone experience. We see more and more OEMs wanting to bundle navigation, and MapmyIndia powers some of the best smartphones in the business – Motorola Milestone and Micromax W900 to name a few. We see the PND and in-dash markets still growing fast as car manufacturers too want to offer this value to customers.
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