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What do you think, will phones GPS systems replace the need for GPS devices like TomTom and Garmin, or will they just be forcing these gps companies to innovate?
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reuters
MOUNTAIN VIEW, Calif. — GPS navigation devices were the latest must-have tech toys just two years ago, and shares of device makers like Garmin and TomTom were soaring.
That didn’t last long. In a turnabout that has been remarkably swift even for the fast-moving technology business, those companies have suffered as competition has pulled down prices — and as more people have turned to their cellphones for directions.
In the latest blow to the business, Google announced a free navigation service for mobile phones on Wednesday that will offer turn-by-turn directions, live traffic updates and the ability to recognize voice commands. The service will initially be available on only one phone, the new Motorola Droid, but will be expanded to more phones soon.
In a briefing on Tuesday in advance of its announcement, Google said that the service might be supported by advertisements in the future. That would make driving directions the latest form of information to shift from being a paid service to one that is ad-supported.
“This is consistent with a certain pattern of Google, where they are able to build volume and usage of a product and then subsidize it with advertising,” said Greg Sterling, principal of Sterling Market Intelligent, a research firm. The losers, he said, were companies like TomTom and Garmin, along with the cellphone carriers, which offer navigation services by subscription.
Eric E. Schmidt, Google’s chief executive, said that he didn’t view the new service as hurting an industry. Instead, he said, it is a boon to consumers, made possible by the increasing power of smartphones and the growing ubiquity of Internet access.
“Obviously we like the price of free, because consumers like that as well,” he said.
But analysts say that if successful, Google’s service could chip away at sales of stand-alone GPS devices and the subscription services offered by cellphone carriers.
Sales growth for those devices is already slowing. In 2007, global shipments of stand-alone navigation devices grew a hefty 131 percent from the year before, according to data from the research firm In-Stat. But the firm predicts that shipments will grow just 19 percent this year from 2008, and a price war has hurt the industry’s profits.
“With a free alternative that is just as good, I don’t see much positive growth for the likes of TomTom, Navigon or Garmin,” said Dominique Bonte, director of navigation research at ABI Research. “If it’s free and a good service, why would you pay for something you can get for free?”
Google’s announcement also reflects a broader shift toward consolidation in the gadget world.
The smartphone is already the Swiss Army knife of the digital age, able to transform into a camera, music player or game machine at the swipe of a finger. Now it is increasingly a navigation device too.
Many people still prefer dedicated GPS devices, which tend to display maps faster since the data is typically stored in the device rather than downloaded over a wireless network. But the list of smartphone shortcomings is shrinking. Smartphone users can download applications that offer spoken directions and live traffic updates. And at $100 to $300 apiece, smartphones are competitively priced with GPS units, which average about $177, according to the research firm NPD Group.
By 2013, phone-based navigation systems, which are already more popular among younger smartphone owners, will dominate the market, according to a recent report from Forrester.
The makers of navigation devices have not ignored the spread of smartphones. But Google’s move could make it harder for them to adapt.
TomTom, based in Amsterdam, introduced a $100 navigation application for the iPhone in August. The company said the program had been downloaded close to 80,000 times. Garmin recently released the Nuvifone, a hybrid of a navigational device and a cellphone that has generally received poor reviews.
“Turn-by-turn navigation on a handset is what we’re been doing with the Nuvifone,” said Ted Gartner, a spokesman for Garmin, which declined to release sales figures for the phone. “Google’s announcement reaffirms that consumers want their smartphones to double as a navigation device.”
Julien Blin, principal analyst at JBB Research, called Garmin’s phone a “desperate move,” adding: “The Nuvifone is around $300, and you can get an iPhone for a comparable amount that can now do the same thing.”
Shares of both TomTom and Garmin plummeted Wednesday after Google’s announcement. Garmin’s shares fell 16 percent to $31.45 on Nasdaq, while TomTom’s shares closed around 21 percent lower on the Amsterdam Stock Exchange.
Google’s navigation service, which for now works only in the United States, is part of a new version of Google Maps for Mobile, software that will work on the growing number of phones that run Google’s Android operating system. Google executives said they eventually hoped to offer the service on Apple’s iPhone and other mobile devices. But they said this would be up to those device makers. Apple and Google have clashed over Apple’s reluctance to approve an application that works with the Google Voice calling service.
As mobile services that involve location have become increasingly important, the underlying mapping data has become a valuable strategic asset. Google recently began creating its own digital maps in the United States, ending a contract with the map data provider TeleAtlas, which is owned by TomTom.
A year earlier, Google had chosen TeleAtlas to replace Navteq, a map data provider that Nokia acquired for $8.1 billion in 2007. Google and Nokia are rivals in mobile phone operating systems.
This article has been revised to reflect the following correction:
Correction: October 30, 2009
An article on Thursday about a new GPS navigation service from Google misstated part of the name of the firm of Julien Blin, an analyst who commented on the GPS device industry. It is JBB Research, not JBB Industry.
------------------------------------------------------
reuters
MOUNTAIN VIEW, Calif. — GPS navigation devices were the latest must-have tech toys just two years ago, and shares of device makers like Garmin and TomTom were soaring.
That didn’t last long. In a turnabout that has been remarkably swift even for the fast-moving technology business, those companies have suffered as competition has pulled down prices — and as more people have turned to their cellphones for directions.
In the latest blow to the business, Google announced a free navigation service for mobile phones on Wednesday that will offer turn-by-turn directions, live traffic updates and the ability to recognize voice commands. The service will initially be available on only one phone, the new Motorola Droid, but will be expanded to more phones soon.
In a briefing on Tuesday in advance of its announcement, Google said that the service might be supported by advertisements in the future. That would make driving directions the latest form of information to shift from being a paid service to one that is ad-supported.
“This is consistent with a certain pattern of Google, where they are able to build volume and usage of a product and then subsidize it with advertising,” said Greg Sterling, principal of Sterling Market Intelligent, a research firm. The losers, he said, were companies like TomTom and Garmin, along with the cellphone carriers, which offer navigation services by subscription.
Eric E. Schmidt, Google’s chief executive, said that he didn’t view the new service as hurting an industry. Instead, he said, it is a boon to consumers, made possible by the increasing power of smartphones and the growing ubiquity of Internet access.
“Obviously we like the price of free, because consumers like that as well,” he said.
But analysts say that if successful, Google’s service could chip away at sales of stand-alone GPS devices and the subscription services offered by cellphone carriers.
Sales growth for those devices is already slowing. In 2007, global shipments of stand-alone navigation devices grew a hefty 131 percent from the year before, according to data from the research firm In-Stat. But the firm predicts that shipments will grow just 19 percent this year from 2008, and a price war has hurt the industry’s profits.
“With a free alternative that is just as good, I don’t see much positive growth for the likes of TomTom, Navigon or Garmin,” said Dominique Bonte, director of navigation research at ABI Research. “If it’s free and a good service, why would you pay for something you can get for free?”
Google’s announcement also reflects a broader shift toward consolidation in the gadget world.
The smartphone is already the Swiss Army knife of the digital age, able to transform into a camera, music player or game machine at the swipe of a finger. Now it is increasingly a navigation device too.
Many people still prefer dedicated GPS devices, which tend to display maps faster since the data is typically stored in the device rather than downloaded over a wireless network. But the list of smartphone shortcomings is shrinking. Smartphone users can download applications that offer spoken directions and live traffic updates. And at $100 to $300 apiece, smartphones are competitively priced with GPS units, which average about $177, according to the research firm NPD Group.
By 2013, phone-based navigation systems, which are already more popular among younger smartphone owners, will dominate the market, according to a recent report from Forrester.
The makers of navigation devices have not ignored the spread of smartphones. But Google’s move could make it harder for them to adapt.
TomTom, based in Amsterdam, introduced a $100 navigation application for the iPhone in August. The company said the program had been downloaded close to 80,000 times. Garmin recently released the Nuvifone, a hybrid of a navigational device and a cellphone that has generally received poor reviews.
“Turn-by-turn navigation on a handset is what we’re been doing with the Nuvifone,” said Ted Gartner, a spokesman for Garmin, which declined to release sales figures for the phone. “Google’s announcement reaffirms that consumers want their smartphones to double as a navigation device.”
Julien Blin, principal analyst at JBB Research, called Garmin’s phone a “desperate move,” adding: “The Nuvifone is around $300, and you can get an iPhone for a comparable amount that can now do the same thing.”
Shares of both TomTom and Garmin plummeted Wednesday after Google’s announcement. Garmin’s shares fell 16 percent to $31.45 on Nasdaq, while TomTom’s shares closed around 21 percent lower on the Amsterdam Stock Exchange.
Google’s navigation service, which for now works only in the United States, is part of a new version of Google Maps for Mobile, software that will work on the growing number of phones that run Google’s Android operating system. Google executives said they eventually hoped to offer the service on Apple’s iPhone and other mobile devices. But they said this would be up to those device makers. Apple and Google have clashed over Apple’s reluctance to approve an application that works with the Google Voice calling service.
As mobile services that involve location have become increasingly important, the underlying mapping data has become a valuable strategic asset. Google recently began creating its own digital maps in the United States, ending a contract with the map data provider TeleAtlas, which is owned by TomTom.
A year earlier, Google had chosen TeleAtlas to replace Navteq, a map data provider that Nokia acquired for $8.1 billion in 2007. Google and Nokia are rivals in mobile phone operating systems.
This article has been revised to reflect the following correction:
Correction: October 30, 2009
An article on Thursday about a new GPS navigation service from Google misstated part of the name of the firm of Julien Blin, an analyst who commented on the GPS device industry. It is JBB Research, not JBB Industry.
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