Newton, Mass. - Sales of portable navigation devices (PNDs) and installed aftermarket navigation systems will come under greater pressure from automakers that are getting more aggressive in the navigation market, a Strategy Analytics report contends.
Automakers have accelerated the pace of navigation system development because "of pressures from the smartphone and the potential [navigation] opportunities in the tablet market," the research company said. In addition, although automakers have "been extremely slow to recognize" that "navigation in the consumer device market is largely a commodity," they are "starting to break out of the high price bracket for navigation by offering low-cost devices that are similar to PND solutions." In Europe, for example, Renault and Fiat worked with TomTom "to provide systems with the benefits of embedded navigation but at a significantly lower price."
Increasing OEM aggressiveness in turn will take a toll on sales of installed aftermarket nav systems and PNDs, which are already under pressure from smartphones, Strategy Analytics said.
As a result of these market dynamics, Strategy Analytics made the following navigation forecasts by segment:
OEM embedded navigation: The worldwide market will grow from 12 million units in 2010 to 42 million in 2018 for a compound annual growth rate (CAGR) of 17 percent. Worldwide off-board navigation will grow from 2 million units in 2010 to 27.6 million in 2018.
In North America, embedded navigation sales will rise from 4.5 million units in 2011 to 9.5 million in 2018.
Installed aftermarket navigation: Worldwide sales excluding PNDs will rise from 3 million in 2010 to 9 million in 2018. North American figures weren't broken out. The worldwide growth largely reflects the growth in the installed base of vehicles in the developing world, the company said.
PNDs: Worldwide sales will decline from 37 million units in 2010 to around 32 million in 2018 for a CAGR of -2 percent. Revenues will fall from $5.5 billion in 2010 to $1.8 billion in 2018 for a CAGR of -13 percent. In North America, PND shipments will fall from 14.6 million in 2011 to 11.4 million in 2018, with revenues falling from $1.77 billion to $627 million.
In other findings, Strategy Analytics said aftermarket systems are also "pressured by OEM navigation systems that are increasingly more tied to the bigger infotainment offering" as well as by off-board, or cloud-based, OEM navigation systems like those appearing in Ford Sync infotainment systems, the company continued. "Driven by systems such as Ford's Sync, off-board navigation is rapidly expanding in North America," the company said. In addition, Toyota, GM, and Kia are preparing to offer their own version of off-board navigation, "which is set to become a common feature in North America."
Another aftermarket navigation challenge is the rise of OEM infotainment systems whose increasingly complex human-machine interfaces "are often underpinned by increasingly integrated operating systems," Strategy Analytics said. The human-machine interface "is becoming more sophisticated, often incorporating voice recognition and touchscreens," in turn making the replacement of embedded factory systems "more difficult for consumers as they may disrupt other functionalities."
Suppliers of installed aftermarket systems, however, are fighting back. Currently aftermarket navigation is typically limited to premium aftermarket head units, but "more midrange head units and even some entry-level head units will be fitted with navigation capability," the company forecast.
In the PND market, Strategy Analytics cast doubt on suppliers' hopes that replacement sales would offset heavy market saturation in North America and Europe. That hope "is unlikely to materialize as many consumers are opting for smartphone navigation or purchasing a vehicle with embedded navigation," the company said. Nonetheless, the company said, "clearly many consumers do prefer to have a separate dedicated device for navigation, and PNDs remain a low cost option."