How free turn-by-turn nav is changing telematics

How free turn-by-turn nav is changing telematics

Is free turn-by-turn navigation the beginning of the end for premium telematics?
Will it decimate the market the way Craigslist destroyed the paid classifieds business or the way YouTube is eating into the cable business?
The navigation business is at a turning point, as the granddaddy of in-car applications sees competition from on-phone apps.
"Free turn-by-turn navigation was the first shot over the bow for the whole industry," says Scott Sedlik, vice president of marketing for Inrix, a provider of real-time traffic services.
Ford did its part to whittle down the perceived value of driving directions by putting its SYNC into budget models.
"OEMs are seeing what's available now on iPhones and Android phones, and realizing they have to offer some level of that functionality within their vehicles, for safety reasons and to differentiate themselves," Sedlik says.
But, while even as free turn-by-turn navigation changes business models, it's also creating much broader adoption and consumer awareness, which Inrix and other companies hope will lead to more demand.

PNDs take a hit

Of course, the part of the industry that's most felt the impact of free navigation is portable navigation devices.

"That industry has seen the end of any growth and will be lucky to maintain its current volume," says Roger Lanctot, director of business development for the global automotive practice at Strategy Analytics.

Next to feel the pain will be makers of after-market navigation apps that are downloaded to the smartphone, according to Danny Kim, analyst and global manager for research firm iSuppli.

The increasing availability of low-cost, open-source mapping will let phone manufacturers offer free navigation software preloaded on phones.

There were more than 2.9 million purchases of aftermarket smartphone navigation applications in 2009, iSuppli estimates, with the Apple iPhone handling approximately 50 percent.

But navigation software preloaded on the phone at purchase is by far the largest segment, and the company estimates usage will grow from 14 million users in 2007 to more than 251 million in 2013, a combined annual growth rate of 61 percent.

Nokia boosted the free trend by offering its Ovi Map with turn-by-turn navigation as a free download this year.

In the second quarter, it began preloading the app on all of its smartphone models.

The end of on-board navigation?

Kim expects Nokia and Android devices to lead the preloaded navigation application market, while downloadable or carrier-branded navigation may remain on entry-level phones.

"Since Nokia owns its map supplier, Navteq, it can afford to give away a free navigation program," he says.

“Other smartphone companies will also need a low-cost map source to compete with Nokia’s free navigation application.”

This doesn't necessarily mean the end of on-board navigation.
There are some big advantages to having an onboard navigation system, according to Lanctot.

First, it lets the navigation application communicate with other systems in the car.
The navigation system can be aware when the car is moving, and it can let other systems take priority in an emergency.

"The smartphone is a fantastic platform, but there are so many features and functions loaded on there, it's inevitable that there will be conflicts," he says.
For that reason, Lanctot doesn't think that smartphone navigation will ever completely replace onboard navigation systems.

Get snazzier to survive

To stay in the game, car-makers and navigation service providers have to add additional features on top of the basic turn-by-turn directions, Inrix's Sedlik says.
For example, while Inrix already offers predictive routing, it's also expanding its network of real-time traffic info to include arterial roadways.

There may be more opportunities for tying location-based services to navigation, says Susan Yost, in-vehicle infotainment marketing manager for Intel.

What if you could integrate your to-do list with navigation, so that, for example, if you need some finish nails, your car can ping you when you're near the Home Depot?

Sure, you could have looked up the store on the Web before you left, but now you can be more efficient.

The question, Yost says, is, "How to tie that service to what you have today and not pay a lot extra."

Because if it's a consumer service, the right price point is free.

For more on smartphones, see ‘The smartphone: friend or foe of in-car infotainment?’. Click here

For more on local search, see ‘Telematics and local search: The next big thing ’.Click here

Susan Kuchinskas is a regular contributor to TU.


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