You have to hand it to Apple. They not only spun a significant product line from a single iPod but also turned on a torrent of recurring revenue by creating the iTunes store. Wouldn’t the leading suppliers of portable navigation devices (PNDs) love to do something similar?
Garmin’s nüLink! service offers one possibility. The firm’s $499.00 nüvi 1690 PND includes a two-year subscription to nüLink!, which connects customers to online information like Google local search, traffic, weather, fuel prices, movie listings, and more. If customers like it, they may re-up when the free subscription expires, as some customers do for Sirius/XM satellite radio, OnStar, and other fee-based services. Time will tell how much customers are willing to pay for in-vehicle connectivity.
Preparing RecommendationsOtherwise, PND makers are adding features, exploring new market opportunities, and doing whatever else they can to combat price erosion. Richard Robinson, principal analyst, automotive, at Suppli Corp., suggests that PND makers have seen their best year – 2008. That’s when unit shipments for tier one PND suppliers grew by 34% and revenue increased by 10%. Last year, however, iSuppli estimates that production dipped by 6.5% while revenue fell 24%. For 2010, the research firm predicts a 5% increase in production and a 12% falloff in revenue.
“The market was worth $9 billion in 2008 and will be worth $3.6 billion by 2015,” Robinson says, adding that profits are slipping from a high of 60% per-unit to single digits.
Automakers are typically not inclined to cede dashboard space to portable devices. Touch-screens were common among vehicles at the Detroit Auto Show, and navigation, though not yet mainstream, is an obvious touch-screen application. “The OEM market is staging a substantial fight-back across the board,” Robinson says. “OEMs will offer navigation at prices below €400-500, and at those prices, factory-installed navigation is very tempting.”
Will you expect factory-installed navigation in the next car you buy?
John Day recently launched John Day’s Automotive Electronics News
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