The number of smartphone-based OEM and aftermarket on-board navigation systems in use is projected to rise to 81 million units in 2010, up from eight million in 2009. By 2014, usage will increase to 297 million.
"Smartphones over the next decade will rival PCs as a market for hardware, software, communications and location based services (LBS)," said Danny Kim, analyst and global manager for automotive research at iSuppli. "In the last two years alone, the smartphone has become the most important platform for map and navigation usage. With maps becoming a standard feature in a growing number of smartphones, the number of smartphone map users is increasing sharply."
The smartphone is also rapidly pioneering new LBS applications. "iSuppli also believes - for several reasons - that the smartphone is likely to generate many innovative LBS apps in the next five years," Kim added. "First, Apple's iPhone is the most successful LBS battleground so far with more than 6,000 LBS apps available. Furthermore, the iPhone's dominance is primarily in the aftermarket downloadable navigation application market. Finally, Nokia and Android devices will lead the OEM preloaded navigation application market."
Smartphone on-board navigation market: OEM vs aftermarket
Navigation software can be included by smartphone manufacturers and embedded into the smartphone - an approach iSuppli calls OEM on-board smartphone navigation, similar to the terminology used in the auto industry. Most on-board navigation software will be included as a feature by smartphone manufacturers and preloaded onto the device. To this end, OEM or preloaded on-board navigation will be the largest segment of the overall market for on-board smartphone navigation, driven mainly by Nokia.
Navigation applications also can be downloaded by the smartphone user after the device is purchased, a model iSuppli terms as aftermarket on-board smartphone navigation. While the segment is much smaller, aftermarket on-board smartphone navigation is expected to get a big boost in 2010 given that Nokia made available its Ovi Map with turn-by-turn navigation a free download earlier this year. More than 10 million Ovi Map navigation applications were downloaded in the first quarter, although download volume in the second quarter will decline because Nokia already has preloaded the navigation application on all of its smartphones.
Most of the paid aftermarket on-board activities are currently on the Apple iPhone given that navigation is not a preloaded app. To date, the iPhone accounts for nearly 50% market share of the total number of aftermarket on-board navigation sales, estimated at more than 2.9 million applications in 2009.
A large opportunity
Such numbers offer considerable opportunity for navigation software companies. And because Apple gets 30% of the navigation app retail value, the business model also benefits Apple significantly. In 2010, the iPhone on-board navigation market is forecasted at 5.8 million units with an average price of at least US$50 per app, which translates into around US$290 million in retail value or approximately US$87 million for Apple.
In contrast, Nokia receives no revenue for its preloaded Ovi Map navigation software. Because Nokia owns its map supplier, Navteq, Nokia can afford to give away a free navigation program. Other smart phone companies will also need a low-cost map source to compete with Nokia's free navigation application.
The increasing availability of low-cost maps will allow many smartphone manufacturers to offer free preloaded on-board navigation software as the open-source maps expand their coverage. Such availability means that aftermarket on-board navigation will see a declining market share in smart phones.
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Labels: Miscellaneous , Other mobile phone brands
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