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Portable Navigation Devices Go Mainstream

The enormous market expansion and related price war in the consumer navigation market is no longer new. What has changed is that the resulting attempts at product segmentation and the additional revenue streams for the most competitive portable navigation segment are increasingly arriving in the form of network-connected services.

Over the past few years, higher-end models have offered features such as text-to-speech and real-time traffic information. But as even these features are incorporated into the most inexpensive products by generic device manufacturers, connectivity is becoming the last bastion of feature differentiation.

"By next year, simple one-way traffic information over satellite radio will be found even on the lowest-priced portable navigation devices sold for under $300," says ABI Research principal analyst Dan Benjamin. "The big players in the portable navigation market are going to see increased competition, not just from me-too products offered by the classic consumer electronics vendors, but also from thin-client specialized vendors such as TeleNav and Wayfinder. The thin-client players will be able to advertise perpetually updated maps and POI, and lower up-front costs due to reduced storage and processing needs. We expect on-board portable navigation vendors to follow TomTom and offer more connectivity, but with a focus on premium traffic information and location database updates."

Benjamin also believes that some of the newest market entrants, big names like Philips and Sony, could be in for a rude market awakening. "Established navigation names like Magellan have been forced to clear out their products through discounters, and Navman is publicly up for sale. If they come in expecting to compete on brand instead of price or features, I wouldn't be terribly optimistic. This market is comparable to the audio player market before the iPod. Many had products, but it was the service component in iTunes that separated Apple's offering from the pack."

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