Frost: Auto Companies Alter Portable Navigation Systems Aftermarket

February 2, 2007 // Published as a news service by IHS

According to Frost & Sullivan, PNDs constitute one of the fastest-growing product segments in the aftermarket and are attracting considerable attention for their versatility and cost-effectiveness.

PNDs cost as much as 50% less than embedded navigation systems, making them extremely attractive in the aftermarket.

Recent analysis from Frost & Sullivan of the European aftermarket for PNDs found that the total number of systems sold in the aftermarket is estimated to grow from 10 million units in 2006 to 30 million units in 2012.

Analysts said while consumer electronic majors such as TomTom and Garmin have long dominated the PND space, several traditional automotive companies are now eyeing this area after realizing the immense potential of dedicated PNDs.

Companies such as Blaupunkt and Harman-Becker have entered the market in a bid to get their share of the available revenue opportunities.

"Traditional automotive companies have started bringing out their own PND products to challenge market leaders such as TomTom and Garmin," said Frost & Sullivan research analyst Shyamsundar Anandhan.

"These companies are likely to leverage their extensive technical knowledge in the automotive industry, as well as brand image, to promote their PNDs in the aftermarket."

In keeping with the features included in current market-leading products, analysts said new market entrants are also focusing on providing features such as dynamic re-routing and integrated traffic message channel (TMC).

Many new participants also believe that integrating features, such as moving picture experts group audio layer3 (MP3) playback or joint photographic experts group (JPEG) viewers, into PND systems will help attract younger end-users. However, market leaders are unconvinced about including multiple entertainment features as they are not a critical end-user requirement.

Consumer demand, however, is geared toward core navigation features such as dynamic re-routing, speed of route calculation and Bluetooth-based off-board features, rather than non-functional features, as navigation is clearly the main reason for purchasing PND systems.

As a result, analysts said companies that are able to offer products with such features are likely to meet with greater success in the aftermarket.

The biggest challenge facing new market entrants is the need to differentiate their products from those of competitors in terms of offering distinctive products at competitive rates. Incorporating features that enable traffic information and mobile-based telephony are likely to help them achieve strong differentiation in a market flooded with similar products.

While Bluetooth interface provides the key link between the mobile phone and PND to enable hands-free calling, analysts said making off-board navigation a reality poses another major challenge to PND manufacturers in terms of effective pricing and building mutually beneficial partnerships with network operators and off-board content providers.

"PND suppliers could release trial packages in the market with different pricing schemes to gauge the response of the public," said Anandhan. "This will also enable them to arrive at the right costing strategy with other partners such as mobile network operators and content providers."

Source: Frost & Sullivan.