Personal Navigation Devices Declining in Popularity, Study Shows

The increasing popularity of so-called “smart phones” that offer navigation software is hampering the growth of personal-navigation devices, a recent study conducted by ABI Research finds.

Renault Carminat TomTom navigation system.

Dominique Bonte, practice director of ABI Research, says the results are surprising given that his firm and other analysts were predicting rapid growth in the PND segment as recently as last year.

According to the ABI study, global PND shipments will level out at about 39 million units this year. “Forty million a year is still nice, but it’s certainly no longer the booming growth we’ve seen previously,” Bonte tells Ward’s. “One of the major reasons (for the stagnant growth) is connected PNDs, which were expected to help the segment continue grow. But in fact that hasn’t materialized.”

Connected PNDs, such as those offered by TomTom Inc. and Garmin Inc., are able to access the Internet for information, on real-time traffic data and download updated software.

But smart phones, such the iPhone and Blackberry, now offer low-cost navigation applications and boast larger screens than past generations, making them functional in an in-vehicle environment.

Some cell-phone providers are offering device cradles that can be mounted on a vehicle’s dash, making it safer to utilize the navigation function. “You don’t have to hold it in your hand,” Bonte says. “But overall, in terms of safety, in-dash (navigation) is the safest, and the handset is the least-safe solution.”

However, consumers are opting to purchase smart phones with navigation applications, rather than purchase a separate PND and pay monthly fees on both. When you factor in the poor economy and lack of compelling services for connected PNDs, it’s evident why they have failed to live up to sales projections, Bonte says. “Users don’t want to pay an additional fee of about $10 a month. It’s quite expensive.”

Bonte expects cell-phone providers to begin offering navigation software at no cost, further hampering the growth of PNDs. Providers would recoup the expense by embedding advertisements for nearby restaurants or attractions in directions provided by the navigation application.

“Expect to see free hand-set-based navigation in Europe,” Bonte says. “There are a couple of examples in France and Germany, where companies are working to launch free navigation. The expectation is free access will be more important in the future, and we’ll see movement in the U.S. over time.”

PND sales are down worldwide right now, but they have been hit particularly hard in Europe, where they first gained popularity.

“For the first time this year, the PND market in U.S. is bigger than Europe, where traditionally Europe was the leading market,” Bonte says. “(European) providers don’t have the infrastructure. And with the roaming charges when traveling to another country, consumers have to pay a lot.”

The good news is there are indications in-dash navigation systems are migrating from high-end cars down to lower-priced vehicles, Bonte says, noting Renault SA of France, with partner TomTom NV of the Netherlands, announced at this year’s Geneva auto show this spring plans to offer a low-priced embedded navigation system in the new Clio small car.

The Carminat TomTom will be offered as an option for less than E500 ($645), compared with Renault’s existing Carminat navigation systems that range from E1,200 to E2,000 ($1,550 to $2,585).

“Renault may eventually offer the system in every model, not just high-end cars,” Bonte says. “We haven’t seen that in the U.S. yet, but it might still happen. Europe is leading the way for cheaper in-dash systems.”

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