iSuppli: Does Google’s PND App Signal the Swan Song of Dedicated Devices?

Thursday 12th November 2009 - 18:53

For European Portable Navigation Device (PND) manufacturer TomTom and U.S.-based Garmin, Oct. 29, 2009 will indeed be remembered as the day everything changed.

Google’s announcement that it plans to launch turn-by-turn navigation on the Android platform would be enough of a headache in itself, but giving it away for free? Sound the alarm!,” says Richard Robinson, iSuppli analyst.

There has to be some sympathy for PND and navigation device vendors that have spent the last year redefining their businesses in the light of the economic shock that crunched the world economy beginning in the fourth quarter of 2008.

“But clearly, the announcement from Google is a bit like arriving at work one day to find one of the biggest brands in the world has moved in next door, and is offering a version of your product to consumers—for free,” Robinson says.

According to him, what is concerning is that TomTom and other EU-based navigation providers are heavily dependant on the success of their hardware and software products, while for Google, this product will represent yet another very small cog in a much more complex machine that is being built to increase the footfall to their paid advertising.

“Ironically – he continues - the hang over that awaits existing navigation providers is a slice of history repeating itself. Back in 2004, when TomTom released the first PND into the European market, heads were bowed; particularly in the boardrooms of the Japanese electronics manufacturers that dominated the in-dash navigation market.”

He claims Japanese Tier-1 companies such as Alpine, Panasonic and Pioneer, as well as Harman Becker in Europe, were simply not able to counter the threat from the much cheaper and more flexible portable device sector that was taking hold in Europe. “While the rest of the world looked on, these new kids on the block cleaned up during the next two to three years, with triple-digit growth the norm for all PND suppliers.”

“So here we are again, but this time the game has changed for good. Clearly, the take-it-or-leave-it nature of free application downloads will do nothing to boost the image of navigation as a smart product. So it’s no surprise that both TomTom and Garmin’s shares have been badly hit since the announcement on October 28th,” Robinson adds.

iSuppli analyst thinks both companies during 2009 have indeed staged good recoveries in their fortunes—and share prices—but this is move by Google such a disrupter, that it is difficult to see how these device vendors can add real value in the face of the launch of a free app. “No doubt the initial experience will be less rich compared to a dedicated device, but this will change. And it’s not as though Google will be overloaded with complaints about a free app”.

According to Robinson, the question now is: Will the PND platform become a footnote in history—a one-hit-wonder?

“Clearly the PND vendors would like us to think there is more in the locker, but it’s difficult to see the next steps for this dedicated device, particularly in the maturing markets of Europe and the United States,” he concludes.

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