Navigating the route to success

"Nav

The navigation market in Europe is experiencing a period of rapid growth and change. The phenomenal popularity of PNDs and the emergence of mobile phone-based navigation applications are challenging traditional embedded OE navigation systems.

Since the early days of OE-dominated systems, the navigation market has undergone significant changes. Since being launched in 2003, PNDs have transitioned from being a potential threat to vehicle manufacturers to being a dominant market leader in navigation.

According to recent research from SBD, smartphone navigation is widely expected to undergo this same transition, with forecasts of more than ten million navigation-focused handsets being sold in 2012.

The aggressive acquisitions planned by Nokia and TomTom have created a greater sense of competition within the European navigation market, leaving other suppliers keen to find new ways of gaining a competitive advantage.

However, the predicted decline of embedded OE navigation systems in the face of PNDs has proved to be overly pessimistic. There is still a strong market for embedded systems offered by vehicle manufacturers. Indeed, experience of using PNDs has given many drivers a taste of navigation, and they are now upgrading to embedded systems with their superior in-vehicle integration.

Away from the high-end luxury vehicle segment there is a high level of price sensitivity associated with navigation. Vehicle manufacturers and Tier 1 system suppliers are starting to respond to this issue by developing low-cost embedded navigation systems with a target retail price of around €400 by 2012.

Over the last two years, many OEMs have begun to target an emerging segment of consumers who have already experienced PND navigation and understand the benefits, but are still unwilling to pay for traditional high-end OE navigation.

OEMs such as Fiat and Kia have launched a new range of low-end OE navigation systems aimed largely at attracting current PND users. This has created a two-tiered cost trend, in which high-functionality systems continue to be sold in the top vehicle segments, whilst volume manufacturers increasingly develop lower-functionality and lower-cost alternatives.

Conclusion

The European navigation market is clearly growing at a healthy pace, with all three major segments (OE, PND and smartphones) expected to co-exist over the next five years. However, understanding the future size of the market for navigation systems is only half of the challenge.

The relationships between the three major segments, as well as within the navigation value chain, are due to change significantly over the coming years.

Conclusion

The European navigation market is clearly growing at a healthy pace, with all three major segments (OE, PND and smartphones) expected to co-exist over the next five years. However, understanding the future size of the market for navigation systems is only half of the challenge.

The relationships between the three major segments, as well as within the navigation value chain, are due to change significantly over the coming years.

SBD's report entitled: "Navigating the route to success" was released in January 2008 and is available to purchase via Telematics Update's Report Marketplace. Go to http://social.telematicsupdate.com/report/2081 for more details about the report.

The report is divided into two sections:

1. Market trends for navigation in Europe

This section analyses the portable and embedded navigation market, looks into the growth of smartphone navigation applications, and examines the implications of the recent spate of mergers and acquisitions within the digital mapping industry.

2. Design solutions for low-cost embedded navigation

This section includes examples and strategies to reduce the cost of embedded navigation systems, including the separation of software and hardware, map storage methods, Human-Machine Interface (HMI) and solutions based on integration of PNDs.

Andrew Hart is a project engineer at SBD.


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