GPS Changing So Fast, It May Get a Speeding Ticket

April 20, 2007 — -- Global positioning system units help consumers get to where they want to be. But the GPS market is increasingly where companies want to be.

Traditional portable navigation device vendors, such as Garmin and Magellan, are competing against:

-- Mobile audio brands such as Pioneer and Alpine

-- Electronics companies such as Sony, JVC and LG Electronics

-- PC companies such as HP

-- Analog navigation brands such as Rand McNally and ViaMichelin...

...and a host of other companies, from strong competitor TomTom to 2006 holiday season breakout Mio.

In fact, the product category is moving so quickly that participants might just get a speeding ticket. According to projected retail tracking we've done here at the NPD Group, where we do market research, GPS drove nearly half a billion dollars in sales in 2006. The category was one of the fastest-growing consumer technology segments that NPD tracked, with year-over-year units growing an amazing 255 percent.

This even outpaced the growth rate of 2005, where the market saw unit growth approach an also impressive 170 percent.

GPS Locators Get More Portable

Virtually all of the category growth has been in portable navigation devices that are typically attached to one's windshield via suction cup or mounted on the dash. These are in contrast to the larger in-dash systems that boast more features, better media integration, and cleaner aesthetic continuity, but at an increasing price premium over these portable units.

Indeed, some portable navigation devices -- such as Garmin's Nuvi line and Mio's Digi-Walker H610 -- are now so small that they can be carried in one's pocket. The cellular industry is also keeping a close watch on the category, with Sprint, Verizon, and now AT&T offering cell phones that are surprisingly effective at navigating consumers to their destinations.

What's down the road? To avoid commoditization, market leaders such as Garmin and TomTom will need to diversify their offerings.

Garmin has developed a GPS unit that supports MSN Direct, the FM-based service from Microsoft that can broadcast updates on weather, traffic, stocks prices, sports scores, and local movies.

TomTom has collaborated with Fujitsu-Ten's Eclipse brand to deliver what could be positioned as the best of both worlds -- the Eclipse AVN2210p is an in-dash receiver that includes a removable portable navigation device developed by TomTom.

Searching for Dim Sum

Later this year, Dash Navigation will release the Dash Express, which integrates a cellular modem that allows access to local information provided by Yahoo. Type in "dim sum" and the unit will retrieve a list of local Chinese restaurants even if the delicacy is not in the restaurant's name. The Dash Express is expected to carry a monthly fee that includes live map updates so you never have to manually update the unit.

But while navigation device manufacturers would love to navigate further into consumers' wallets, it will be difficult to steer around consumer objections to yet another subscription.

In the next few years, technologies such as ultra wideband and WiMAX could combine to turn a portable navigation device into a wireless hub for media throughout the car, transmitted from practically anywhere. As manufacturers' eyes focus on the future, though, such a product may need to take stronger precautions to keep drivers focused on the road.

Ross Rubin is director of industry analysis for consumer technology at The NPD Group, a leading market research firm.