Which route should companies take?
As the consumer satellite navigation industry continues to evolve, it is interesting to look at the various business models of the industry players and how these drive their market positioning. At a basic level, we see two types of business models currently in the industry. On one side, there are the map providers; a mixture of global and regional/local players and on the other, data-driven technology firms such as Google (Google Maps) and Microsoft (Bing Maps). Whilst the former have expertise in map development and navigation, the latter tend to be stronger in content acquisition and management.
This is an interesting evolution from an industry make-up standpoint and raises questions around which model is likely to be dominant going forward? Can both co-exist given their respective strengths or are we likely to see major changes in how these companies operate within the satellite navigation space?
How the industry has evolved
Location-related data is increasingly embedded into software and systems that we use and we have seen a significant increase in combining location data with other layers of content to drive additional value-add. For the consumer satellite navigation industry, this means that consumers look for more than maps and directions getting them from A to B. In response to this, the industry has developed content additions such real-time traffic and weather updates. Furthermore, industry players have developed vast databases of places of interest, from hospitals to restaurants and linked phone number information to enable users to find a desired restaurant, call and make a booking and then be guided there through the turn-by-turn navigation that the device provides, whether PND or Smartphone.
Companies involved in this industry need to adapt to these market requirements by developing a core competency in data acquisition and management as this will continue to be increasingly central to the product development. However, this is a balancing act; as companies make decisions about how to allocate resources (labour and capital), there needs to be a clear understanding of what customers value and how the product strategy focuses on the customers’ value drivers. This will depend on which customers are being targeted.
Different segments, different uses
The market for satellite navigation can be split into three distinct groups; Personal Navigation Devices (PNDs), Smartphones and in-car systems and each have different requirements, with varying degrees of importance attached to each.
PND and in-car systems are predominantly used as navigation-applications and therefore the ability to input the desired destination and to have the device provide accurate and reliable directions, taking into account traffic and weather conditions is most critical requirement. This has consequences as to how the product is developed because there is a high focus on map accuracy as well as developing the correct traffic attributes to make sure that the directions given are optimal.
By contrast, map-based applications on Smartphones tend to be used more from a pedestrian standpoint. As such, whilst the navigation remains important, the breadth and depth of the content layered on top of the map becomes most important for Smartphones. This is because users look to discover and find out about new places of interest near to where they might be at any particular time. Without this rich content on top of the map layer, the user experience is limited.
This highlights how the end-user behaviour dictates requirements and therefore what the various products should deliver. It also suggests an alignment between the industry players and the end-market they serve; with the more traditional map providers (with a legacy focus on map accuracy and navigation) best placed to serve the PND and in-car systems and the data-centric technology companies serving the Smartphone segment.
What this means for industry players
Firstly, it is important to recognise the different market segments and understand how and why satellite navigation products are used because this helps to identify the customers’ key purchasing criteria. From this, one can develop a product development strategy which focuses on meeting the needs of the key segments targeted.
Secondly, the challenge for the traditional map providers will be how they compete with likes of Google and Microsoft in the Smartphone segments. This may require a change in how they acquire and manage data, such as using user-generated content which enable a more scalable approach to data collection, or using web-crawling technology to pick up new or update existing content.
Developing competencies in data acquisition and collections will also mean strengthening internal capabilities, to reduce the cost of data acquisition and management and making sure the right processes are in place to build and grow the content base in a timely manner to ensure that not only is there content growth but the data is up-to-date and accurate.
In conclusion, we are likely to see convergence between the various business models employed by the satellite navigation industry players. The main shift is likely to come from the traditional-map players as they will need to adapt to the ever increasing layers of content being delivered to customers. This will mean developing products that are fit-for-purpose across the market segments and developing the capabilities to acquire and manage data on a larger scale than ever before. The winners will adapt quickly to the ever-increasing data-centric market environment.
Mark your calendar
MAY 2011 TO AUGUST 2011
INDUSTRY | LBS | GPS | GIS | REMOTE SENSING | GALILEO UPDATE
I do not think so.
The “segments” will collapse to a single segment – the smart phone.
The PND segment and automotive segment with respect to GPS/LBS/etc exist for the tactical self interests of the vendors in each segment – not the customer.
The customer wants “their car” to augment their smart phone – access to a better antennae, power, vehicle metrics (speed, etc), UI, etc – but the maps, POI, etc exist on the user’s smart phone with a single data plan and single location for saved routes, favorite POIs ,etc.
I see no need for the PND at all.
P.S. See the Mapsforge project for an interesting perspective.
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