Free in-vehicle navigation available from Google and Nokia is challenging the stranglehold that aftermarket and subscription navigation companies have had on the market.
Late last month, Nokia announced plans for its millions of smartphone users to download for free a new version of Ovi Maps that offers turn-by-turn voice guidance for 74 countries in 46 languages.
Nokia is joining Google in bringing free navigation into vehicles through smartphones carried aboard by drivers and passengers.
In October, Google unveiled its Google Maps Navigation, which is free to users of smartphones powered by Google's Android 2.0 mobile-phone platform.
Mike Jackson, CEO of AutoNation, said drivers expect to transfer into the car for free any online services that they can get on their smartphones. AutoNation is the largest U.S. dealership group.
"The future is not the subscription model," Jackson said last month at the Automotive News World Congress in Detroit. "The litmus test is: If we can't charge them from Day One, when we're delivering the car, we've got a problem."
Nokia and Google now are in hot pursuit of a market dominated by portable navigation device makers such as TomTom and Garmin as well as subscription-based services such as OnStar.
Phil Magney, vice president of automotive research for iSuppli, a market-research company, said the free services will quickly erode the sales of portable navigation devices.
'Nail in the coffin'
"It's another nail in the coffin for PND makers, I'm sorry to say, and their stock prices have been falling as a result of this," Magney said.
TomTom International BV of the Netherlands traded last week at $8.50, well below its 52-week high of $19.25.
Tom Murray, TomTom vice president of market development, said he could not comment on 2009 sales until his company releases its earnings. But he said that more than 50 million households in North America now own portable navigation devices like those sold by TomTom.
TomTom, he noted, sells a turn-by-turn navigation application for the iPhone. He said the company expects continued strong sales of its traditional devices while it pursues other ways of delivering navigation services.
Murray also questioned whether competitors' new offerings are truly free.
"Many of the offerings aren't technically free, as they apply only to consumers who purchase a particular model of phone and commit to the accompanying service plan," he said.
For its part, Google said voice-guided turn-by-turn navigation has been the most requested mobile-application feature from Google Maps. A Google spokesperson in a statement said Google Maps Navigation "is a natural extension of our Google Maps for mobile offerings, which already included driving directions."
Magney said Google and Nokia will pursue different paths to profit eventually from navigation giveaways that immediately benefit drivers.
Sell more phones
Google's motive for free navigation is to generate mobile search traffic in the same manner that the company now profits from desktop search, Magney said. Nokia's motive is to sell more phones by bundling them with navigation to combat the success of the iPhone, he said.
OnStar sees the new players in navigation as a positive, not a threat, said Nick Pudar, OnStar vice president of planning and business development.
OnStar has a 13-year track record of providing reliable navigation, emergency response, and vehicle diagnostic information that attracts about 6 million customers a year, Pudar said. More than 60 percent of those customers pay a monthly subscription after a one-year free trial on General Motors vehicles purchased with OnStar, he said.
"People value the convenience and peace of mind that we're always there," he said. OnStar also is rolling out products for mobile devices that can be carried aboard a vehicle. For example, with the Chevrolet Volt plug-in sedan scheduled to arrive in November, OnStar has a mobile application, which can be downloaded, that allows Volt owners to monitor their battery charge and other vehicle information from their smartphones, he said.
Said Pudar: "We are planning additional connectivity."
(Source: Automotive News)