Connected devices to account for dominant share of total PND space in North America by 2017
Has Garmin finally solved the vexing challenge of how to connect personal navigation devices (PNDs) with wireless data services?
With the introduction of its new Smartphone Link app, which links together smartphones and connected PNDs, Garmin may have cracked the code on how to sell its premium Internet-based services to navigation device users. Garmin’s approach combines the power of the smartphone—the platform most users employ for wireless Internet access—with the connected PND, a product area that is enjoying rapid sales growth.
Shipments in 2012 of connected PNDs are projected to reach 2.9 million units in North America, and then continue to climb in the years ahead. By 2017, North American connected PND shipments will have more than doubled, amounting to 6.1 million units.
While the bulk of the PND market this year is still occupied by unconnected PNDs that lack wireless capabilities, their share of market is declining. Connected PNDs will grow to represent more than 61 percent of total PND sales in North America in 2017, up from 24 percent in 2012.
Connected navigation continues to represent an area of opportunity to PND makers like Garmin, allowing them to provide users with an experience closely matching the navigation services available in vehicles and found on smartphones with turn-by-turn navigation capabilities. With two-way connectivity that can access real-time content, connected PNDs can hook up to a mobile network in order to get traffic updates or weather information, as well as access content off-board such as Google search results.
For now, PND makers are struggling to implement connected navigation strategies to migrate a large number of their existing users to connected devices and services. Enabling the majority of their device portfolio must be a top priority for PND makers, IHS Automotive believes, with future revenue opportunities lying in connected premium services.
Garmin arrived late to the connected PND party after failing to gain traction with its own brand of navigation-oriented smartphones. The company then left it to rivals TomTom and Navigon to introduce PNDs with connectivity modules.
Now the company is betting its connected future on the Smartphone Link app, which enables users to connect some Garmin PNDs to Android smartphones via Bluetooth. When connected, the two devices can work in tandem to relay real-time navigation information.
For instance, a Google search for a location can be conducted on a smartphone, and the address results are then sent to the Garmin device via an integrated link in Google Maps. Other features that Garmin users can activate via Smartphone Link include free services such as weather information, fuel- price data and live camera images showing real-time traffic.
In contrast to the Garmin model, TomTom has been pursuing a different strategy for its connected devices. From the start, TomTom has focused on integrating the connectivity module either in the PND or as an external dongle, with neither solution making use of the connectivity provided by an existing smartphone. The integrated model means TomTom must sell subscriptions for its LIVE services, but the company includes long free trial periods that it hopes can convince users of the benefits derived from the services. Renewal rates for users after the free trial period currently hover between 18 percent and 25 percent.
Unlike the TomTom model, however, Garmin’s free service does not require users to be converted into paying subscribers. Users desiring enhanced Garmin features can buy them via the Smartphone Link app, but they need not worry about a data connection to their Gamin device, since the existing smartphone can be utilized.
For a company that has labored to find a connected navigation strategy, Garmin appears to have found an attractive solution not only to its problem but also to an issue that has long hounded PND makers. By connecting its PND devices to users’ existing data connection on the smartphone via Bluetooth, Garmin is able to extend connected services to users without having to justify a business model that requires an additional subscription. And even if enhanced features are purchased, users are not locked into a monthly subscription.
Garmin’s method of connecting PNDs to real-time content also gives the company more flexibility to bring the feature to specific parts of its portfolio. Legacy devices can be enabled as well to work with the Smartphone Link app as long as they are technically compatible.
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