At least 2 major PND vendors sold out over Black Friday, emptying their supply chains despite planning for strong demand.  Gift lists and gadget lists across all media (up to and including the New York Times) have navigation devices prominently positioned.  Major media is beginning to notice, and I was very happy to meet Bill Howard of PC Magazine at the event.  Such awareness is great, because it will push ahead maturation of the navigation market.  Consumers will be more educated and demanding, feature sets will be winnowed down as will the number of players, and new business models will appear. Navigation will become much more common, and appear on more devices.

• Navigation as a Service

Supporting the trend toward device-agnostic navigation, even companies who are dependent on PND sales are taking steps toward delivering their brand of navigation as a service product.  As more devices have the capability to provide navigation (primarily meaning they have a GPS chipset) navigation will not be about the hardware but about the service.  You can envision a future where you plan a trip on your home PC, send it to your car, and once at your destination send it to your phone for use while you are walking to the location – all with the same navigation service provider.

• The market for mobile navigation is highly challenging

Venture capital and investment banks say the ideas must be brilliant to have a chance, and the market is becoming more mature quickly.  Key participants say competition is brutal, prices are falling which cuts into margins, and value-added services are the only way out.  This supports the growth, and consolidation, of markets for traffic data collection and delivery, location-based services, social networking and other value-added products.  If 2007 is the year of navigation, will 2008 be the year of traffic?

• There will be more consolidation in companies, both end-product makers, and chip suppliers.

A rather natural extension of the market competitiveness and growth. Everyone was wondering what Garmin will do, as they have money and did not end up with one of the map data companies, in what is agreed to be just the first round of consolidation.

One further point, an example of how even expert analysts can see things too conventionally.  I have said previously that replicating the databases of NAVTEQ or TeleAtlas was extremely difficult, and although user-generated content and other market changes would lower the revenue from data licenses, it was just too costly to replace all the data owned by those two players.  I continue to feel user-generated content will first make an impact on POI and value-added data (our new report RR-UGMP “User-Generated Digital Maps and POIs” covers this area thoroughly).  But there are other ways to create a map database, skipping entirely the costly and laborious process NAVTEQ and TeleAtlas have used.  What if imagery (photo, video, satellite) were used as the sole method of data collection?  An image of an intersection, combined with high-precision GPS data, can easily allow lane designation, sign reading and documentation, even capturing the shops and buildings for advertising or 3D graphics.  The demand from everyone other than TomTom and Nokia to have alternative sources for map data is pushing this process ahead with surprising speed.  We will be investigating and reporting more, but for now I can add a final conclusion from the session in San Jose:

• There will be map data competition for NAVTEQ and TeleAtlas, from new and potentially better sources, far sooner than most people expect.