Smartphones taking over the navigation market (study)

More speed bumps lie ahead for in-car navigation devices. As maps are becoming a standard feature in smartphones, handheld devices are truly taking over the navigation market for cars, according to a recent report by market research firm iSuppli.

The report indicates that smartphones have already become the most important platform for maps and navigation, and the number of smartphone-based navigation systems will increase tenfold this year, not to mention hitting numbers nearly forty times bigger by 2014. Last year, smartphone-based navigation systems (ie. phones with navigation systems either preloaded into them, or downloaded after purchase) hovered at 8 million units. This year, the projection is 81 million units, and by 2014 the number of units will explode to 297 million.

While this means declining sales for actual GPS navigation devices (like the ones manufactured by Garmin, TomTom, Magellan, or Nokia), the demand for software will increase. Nokia is including its Ovi Map turn-by-turn navigation software in its smartphones for no revenue, because it owns the map supplier, Navteq. Google offers its navigation for free on phones with its Android operating system such as the Nexus One and Motorola’s Droid. Other handset manufacturers will need access to low-cost maps –- which are increasingly available -– to offer free, preloaded navigation systems on their smartphones.

The iPhone dominates the market currently for aftermarket navigation (iSuppli’s term for navigation systems downloaded into smartphones after purchase) by accounting for nearly half of all sales, estimated at 2.9 million applications in 2009. And Apple makes revenue for the sales of navigation apps as it gets a 30 per cent cut from apps sold in its App Store -– $87 million in Apple’s pocket this year, calculated at 5.8 million units with an average price of $50.

However, the market for preloaded navigation systems will completely overshadow the navigation systems downloaded later on, the study predicts — embedded applications will account for some 250 million units by 2014, leaving downloaded applications at around 40-50 million units.

Even though smartphones are gaining a strong foothold in the navigation systems market, in-car devices still have a few advantages, not least of which is a large screen for easy reading. That being said, the stand-alone devices will have a rough ride in the future as they are squeezed between smartphones and so-called in-dash devices (or pre-installed devices in cars.) And it shows: Garmin’s revenue fell by 15 percent to $221 million in the previous quarter, as reported by Reuters.

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