Will Cellphone/PDAs Put Pinch On In-Car Nav?

Navigation capability is spreading to a wider array of consumer devices, the latest of which is the cellphone.

At press time, Nextel was to begin offering navigation services on its GPS-equipped i730 phone, becoming the first major carrier in the United States to support cellphone navigation.

A natural question then is: Will products as widely used as cellphones and PDAs cut into in-car navigation sales? The initial verdict from suppliers and analysts is "no."

"This is one of those instances where technologies will complement each other," said George Filley, VP and GM of the NAVTEQ consumer business unit for North America — a leading supplier of digital map data. "Yes, people can now take their cellphone and navigate, but they also want to take advantage of the best device available at any time," he said.

In-car navigation sales for fixed aftermarket devices are estimated at just under 40,000 annually. And sales of PDAs with built-in navigation or GPS add-on solutions number in the tens of thousands, according to industry estimates.

ABI Research, Oyster Bay, N.Y., estimates there will be approximately 50,000 cellphone owners using navigation in the U.S. by the end of the year.

How far the cellphone navigation market will progress from there is anyone's guess. As part of what is known as the E911 effort, all cellphones will soon offer location-based technology, which can translate into navigation services.

E911 was mandated by the federal government in 1996. It requires that the cellular carriers be able to locate any person using a cellphone to call 911. By the end of this year, all carriers are expected to use Automatic Location Identification to give the latitude and longitude coordinates of a cellphone. This is creating an infrastructure for navigating from a cellphone.

ABI's director of automotive research, Frank Viquez, said that cellphone navigation capability "might be offered on a pay-per-use level as they do in Japan. It's quite possible that everyone who has access to a cellphone will use [navigation] once or twice a year."

But cellphone navigation has proved unpopular in Europe, according to Garmin. "We've tried cellphones with navigation in the European market, and it's an uphill battle. The handset display is much smaller than a PDA display," said a spokesman.

Frost & Sullivan, Palo Alto, Calif., claimed that using a cellphone to navigate while driving a car is simply unsafe and virtually impossible. In-car navigation devices, said Veerender Kaul, program manager for the automotive group, are far more accurate.

Aftermarket in-car navigation suppliers say the increase in consumer awareness of navigation, whether through cellphones, OEM systems or even the use of MapQuest.com, will "lift all boats" and add to in-car device sales.

"I definitely think there will be different forms of competition — cellular, PDA, transportable or portable handheld types," said Fred Roetker, national sales manger for Prestige and navigation at Audiovox. "You'll have different customers with different needs. Also, some companies are trying to make one product serve more than one function. A PDA is a PDA. You can stick software in there for navigation, but then the level of function is limited compared to a product designed for one function only."

Although in-car navigation sales have not yet exceeded niche status, Roetker said Audiovox is looking at the big picture. "There's potential for navigation in every vehicle," he said, claiming that the potential is greater than that of mobile video.

"A 35-year-old with no kids has no need for mobile video," he said noting that once traffic services improve, most everyone will be able to benefit from in-car navigation.

Aftermarket navigation sales are expected to continue to grow by 43 percent this year, to 56,000 units, which is still a very small base, according to the Consumer Electronics Association.

OEM navigation is growing more rapidly if you consider the broader base. Currently about 100 car models, mostly high-end, in North America offer the option of a navigation system. About 20 of those models offer it as standard equipment, mainly through BMW, Mercedes and Lexus. In 2002, 62 car models offered a navigation option, and in 2001, 45 models. "So it's growing at a rate of about 25 to 30 percent every year in model availability," said ABI's Viquez

Nextel's i730 cellular phone embeds Televigation's TeleNav service for auto location. Users can input a destination address via voice to receive turn-by-turn directions and dynamic rerouting if the user goes off course. Users receive a 10-second advanced warning of an upcoming turn. Directions are provided by voice, map displays and arrows on the cellphone screen. The service fee runs $5.99 per month.