NavAds-Whitepaper-v3

Author: Ludovic Privat
Page 1
A Little History of
GPS Navigation
IN-CAR GPS NAVIGATION:
BORN IN EUROPE WITH A U.S.
SATELLITE
GPS navigation find its root in the US military with the
NAVSTAR program that launched its first satellite in 1974
and reached a full constellation of 24 satellites in 1993.
The civilian availability of the GPS signal came in
two waves. First the tragedy of Korean Airlines flight
KAL007 that was accidentally shot by a soviet fighter
jet after straying off course into USSR airspace. Two
weeks later U.S. President Reagan proposed that GPS
was made available to civilians.
But it took President Clinton in 2000 to make the
accuracy of the signal as good for civilians as it is for
the military, removing what was called “Selective
availability“, a feature that introduced errors in the data
broadcast to civilians, limiting the accuracy to around
200 meters.
The end of selective availability opened up the door
to many consumer applications from companies such
as Garmin (US), Navman (New Zealand) and Magellan
(US). But the breakthrough in GPS navigation mostly
came in Europe from Netherlands-based TomTom.
The company released in 2002 its first navigation
software, TomTom Navigator, for Windows CE-
powered PDAs, sold bundled with a car cradle and
a bluetooth GPS receiver. Then their first all-in-one
device, the TomTom GO, was released in March 2004.
It featured a 3.5 inch touchscreen, easy to operate
software menus, a great loudspeaker, was round-
shaped like an iMac and cost €799 at launch. This
device enjoyed a great success, which was followed and
amplified by a strong consumer marketing campaign.
TomTom was soon followed by its aggressive
competitors and the niche market of so-called Personal
Navigation Devices (PNDs) exploded to become one of
the biggest consumer electronics segment in Europe in
just a couple of years.
According to data from market research firm Gfk,
100,000 pieces of PNDs were sold in 2004 across the
five leading EU countries (United Kingdom, France,
Germany, Italy and Spain), this grew to 1.4 million in
2005, and 5.2 million in 2006. That year TomTom had
50 percent market share followed by Garmin (10%),
Navman (8.7%), Mio (4%) and Becker (4%).
This growth was amplified by a continuous decline in
prices. The average selling price was €370 for a PND
in the last quarter of 2005 down to €345 end of 2006
then a huge drop of 33% (to €232) in the fourth quarter
of 2007, according to market research firm Canalys.
According to gfk, in Western Europe, around 14.4
million portable satellite navigation systems were sold
in 2007, up 85 percent against the prior year. That same
year PNDs became a €1 Billion market in Germany.
In 2007 a poll from the European Commission (26,000
respondents) revealed that 20 percent Europeans (EU
27 countries) used GPS navigation, with already 39
percent in the Netherlands and 31% in Germany.
THE RISE OF MOBILE NAVIGATION
The first mobile phone with GPS, the Benefon Esc!
was introduced by Finland-based phone maker
Benefon in late 1999. This market would however
remain quite confidential for a few years more.
TomTom and a coupe of other companies had made
attempts at launching GPS navigation software on
Symbian and Windows mobile handsets in 2004-2005,
but the experience was a bit clunky with a separated
GPS mouse connected to the phone via Bluetooth.
The Future Of The GPS
Market

Page 2
Consumer much preferred the easy to use, touch
screen experience found on PNDs.
In February 2007 Nokia is announcing the N95, their
first GPS-enabled mainstream smartphone together
with Nokia Maps. This time the GPS is embedded
and the software is preloaded. At the end of the third
quarter the company had already sold almost 4 million
of these devices.
In September 2007 Michael Halbherr, Head of the
location-based experience team at Nokia revealed that
Nokia Maps had been downloaded more than 1 million
times since its launch 8 month before. 95% of N95
smartphone owners had established a GPS fix and 67%
of them used it for in-car navigation.
Clearly mobile phones are starting to compete with
PNDs. A first signal of the end of the PND momentum is
coming during the first quarter of 2008 when TomTom,
its map supplier Tele Atlas and SiRF, at that time the
major GPS chipset supplier to the PND industry,
announce profit warnings due to a backlog of products
unsold in the last quarter of 2007.
In the second quarter of 2008 shipments of GPS-
enabled smartphones in Europe, Middle East and Africa
(EMEA) equal those of PNDs for the first time. In the
third quarter Canalys estimates that PND shipment
were down six percent against the previous year -
Meanwhile, shipments of smartphones with built-in
GPS are soaring in EMEA, rising from 4.7 in the second
quarter to 10.4 million in the third quarter.
In August 2008 Canalys estimated 38% smartphones
had GPS in EMEA.
At the Canalys Navigation Forum, held in Budapest
on September 2008 the charts shown on the podium
are not anymore hurting the ceiling. The PND industry
starts to realize that growth is over, even if the entire
year will see 18.1 million PNDs sold in Europe.
MOBILE NAVIGATION: HANDSET
MAKERS, WIRELESS OPERATORS AND -
FINALLY - APP STORES
At that time the mobile navigation market is clearly
divided in two technologies: off-board and on-board
maps, a technology choice that pretty much dictated
commercial strategies: white label services with off-
board maps sold via wireless operators or direct to
consumer products with on-board data. the distribution
of the later was made mostly by bundles between
phones and software.
Off-board (server-based navigation) early vendors in
Europe were Webraska, Telmap, Wayfinder, Appello
and Jentro while Nokia Maps, ALK Technologies, Sygic,
NNG, Navigon and TomTom were the on-board maps
market leaders.
The subscription-based business model used by
wireless operators to sell mobile navigation will
however have a limited appeal to European consumers
- unlike in the United States.
Then the inception of App Stores from Apple (July
2008 along with iPhone 3G, first GPS-enabled iPhone)
and Google (Android Market in October 2008) will
cut the content cord between wireless operators and
consumers.
Mobile navigation quickly becomes a must on app
stores, mostly selling in Europe as a lifetime license
with prices around €80-€100 for a full map of Europe.
As a result, for the full year 2009 half of the top ten best
selling apps in Apple app stores in Europe are mobile
navigation apps, led by Navigon, TomTom and CoPilot
(ALK Technologies).
FREE NAVIGATION ON MOBILE
PHONES
On October 2009 Google announced its free navigation
software on Android smartphones, followed by Nokia
in January 2010. At the same time wireless operators
are also offering free turn-by-turn navigation to their
top customers.
The business becomes therefore more difficult for
mobile navigation vendors (at least not yet on iPhone)
and see the launch of low cost or free solutions
from Navmii and Skobbler using new map data
providers (AND then Openstreetmap for Navmii and
Openstreetmap for Skobbler). NDrive is also surfing on
this wave with a €5 navigation software powered by
TomTom maps that topped navigation charts in many
markets in 2009.

Page 3
WHEN CARS ARE FIGHTING BACK
While the PND market was shrinking and the mobile
navigation market rising, car makers were not staying
idle either, even if changes were more progressive.
At first they competed in offering semi-integrated
PNDs, i.e. personal navigation devices with dealership
or factory-fitted mounts and powering systems, then
they introduced low cost systems.
In 2010 systems priced under €1,000 represent 42% of
sales in Europe, two years later they are at 47% (source:
Nokia HERE).
In 2012 some in-dash navigation systems starts fall
under EUR 500 in Europe. With Renault, Dacia and Fiat
starting to introduce more affordable options.
At the end of 2012 Renault releases R-Link and
MEDIANAV two navigation systems priced under at
€499 and €350 respectively and coming free in top of
range models. MEDIANAV is also coming to Renault’s
subsidiary Dacia.
Fiat, also started to introduce embedded navigation
systems also priced in the €500 range.
At this time the drop in PND sales is not only due
to mobile navigation but also to more affordable
embedded systems. In 2010 market research from
Nokia HERE found that 34% of consumer would likely
replace their PND by an in-dash system, a figure that
grew to 50 percent in 2012.
Not surprisingly since 2010 the number of cars sold
with factory-fitted navigation systems has been
growing at a good clip, from 4.1 million in 2010 to 6.1
million in 2014.
We asked Ludovic Privat, worldwide recognized expert
in the location-based service industry and co-founder
of GPS Business News, to write this White Paper for
NavAds. Generally, people read a map as it comes. NavAds
would like to provide you with some key insights into the
world behind maps and the navigation market in Europe,
including its relatively short history, its global relevance
and how the GPS market will develop.
- Lex ten Veen, CEO NavAds
2007
2,3
2011
4,1
2009
Sales of in-dash navigation in Europe
(in million units fitted in new cars)
2,3
2013
5,6
2008
2,3
2012
4,7
2010
3,2
2014
6,1

Page 4
Today’s state of the
market across PND,
Mobile and in-dash
Systems
PND MARKET DECLINE SOFTENING
While the PND market has been going down 15
percent per year since 2009, during the first half
of 2014 market research firm Gfk noticed “a slight
improvement“ in the PND market in Europe. “In the
first half of 2014, the market saw an 11.3 percent
decline in volume revenue while value revenue fell by 8
percent. In the same period of 2013, the corresponding
figures had been higher at around -15 percent.“
The market landscape is in fact not the same
everywhere, noticed Gfk. While positive
developments are seen in Northern Europe (especially
UK and Germany) Southern Europe markets continue
to suffer a sharp decline. Germany saw for example a
volume decline of 5 percent and a total stable market
value.
“These positive developments are above all
attributable to innovations which are impelling
customers to choose premium products: large screens
as of 5 inches, improved traffic jam warnings via
mobile internet or DAB, free map updates and more,“
wrote Gfk analysts.
In the third quarter 2014 TomTom even noted that the
decline slowed down losing 6 percent in units against
loss of 11% in the second quarter and 12 percent in the
first quarter compared to the previous year.
Another reason of the strengthening of average selling
prices is the strong market concentration. In 2006 the
top 5 brands had 76% market share in Europe. End of
2014 the top two brands: TomTom and Gamin have
together 85% to 90% share on average.
Looking forward, market research firm Berg Insight
predicts that PND shipments in Europe will continue
to fall 8-15 percent annually through 2019. The firm
forecasts that the industry will ship around 4 million
PNDs in 2019.
The research firm also expects that the replacement
cycle of PNDs is likely to be prolonged: “many devices
are now sold with lifetime map updates giving users less
reason to replace their existing device as frequently.“
MOBILE NAVIGATION ON A
CONTINUED RISE
Nowadays mobile navigation is a standard, a
commoditized feature in all smartphones. iPhones
have Apple Maps, Android devices have Google Maps -
Samsung devices also have HERE - and Windows Phone
handsets have HERE Drive.
A number of third party vendors however continue to
distribute successfully their navigation software using
various strategies and business models. Companies
such as TomTom and Garmin (Garmin and Navigon
brand) are leveraging their strong brand and product
features to make the difference. For example having on-
board maps is differentiating against Apple and Google
product that require a wireless connection to work.
Others like Navmii, MapFactor or Skobbler (the later
now part of TeleNav) rely on the free Openstreetmap
database, offering free navigation and making a
revenue essentially selling premium features (speed
camera databases, country map download, etc..) and/or
displaying banner ads.
Sygic, which is currently leading in terms of downloads
(55 million users in August 2014) right after Google
Maps and Waze, has adopted a freemium marketing
strategy with TomTom maps. The software is free to
download but the turn-by-turn navigation feature is
coming as a small premium. Then other upgrades are
possible: real-time traffic, new countries, speedcam
warnings, dash cam recording, voices, etc.
IN-DASH MARKET OPPORTUNITIES
As we learned earlier the take rate of in-dash
navigation in new vehicles is reaching around 40
percent in Europe. This average percentage is however
little representative of the reality: the more expensive
the car, the bigger is the navigation penetration.
While the high end of the market is highly penetrated,
with 60 percent penetration in the D segment (i.e.

Page 5
Honda Accord, Peugeot 407, Jaguar X-Type) and
80% plus in the luxury and high luxury segments, the
penetration is much lower in more affordable cars.
The C segment (Golf, Ford Focus, BMW series 1) has
40 % penetration, the B segment (Opel Corsa, Peugeot
207) has 30% and the A segment (Renault Twingo, Fiat
500) is close to zero penetration. There are therefore
good opportunities for growth in the A, B and C
segments, the B and C segments representing half the
cars sold on the market.
THE BLURRING FRONTIER BETWEEN
IN-DASH AND MOBILE NAVIGATION
The tethering of phones to dashboards to safely display
mobile apps is however an announced landslide for
the in-dash navigation market. There are a number
of technologies available today to replicate apps on
dashboard: some are proprietary like Ford appLink or
General motor’s IntelliLink, some other rate working
across different car brands like Bosch mySPIN, one,
MirrorLink, was developed by a consortium of car
and smartphone makers, and the most talked about,
CarPlay and Android Auto, have been developed
respectively by Apple and Google.
Announced in January 2014 CarPlay and Android
Auto are slowly but surely coming to cars in Europe in
2015. Both tech companies have announced tens of car
brands that will integrate their solution.
Whatever the technology is, the promise is the
same: display mobile apps, including navigation
on a dashboard and leverage the processing and
connectivity of the phone to offer the best experience
on the car screen and navigate it using car commands:
wheel buttons, voice, etc.
The tight integration of these mobile solutions with
the digital life of consumers (music, contacts, text
messages, phone books) gives those a strong appeal
to drivers. In the case of CarPlay and Android Auto
the quality of the voice recognition systems (Siri and
Google Now) is an additional plus.
Usage trends
Source: Berg Insight
Navigation users by platform EU28+2
(in million of active users)
80
PNDs Mobile navigation apps In-dash navigation syst.
60
40
20
0

Page 6
Looking into the
future
CLOUD-BASED VS ON-BOARD
NAVIGATION
In the early days of GPS navigation the value of such
devices was to route you from A to B. Nowadays
the addition of quality traffic information makes
them relevant everyday, even when you know your
destination. In addition to that, a lot of additional
real-time service are hosted on these devices: speed
alerts, speed camera alerts, weather along route and
at destination, eco-route to save gas, fuel price search,
parking booking, charging station booking, etc.
A significant part of these services are real-time and
most of them have impact on routing or estimated time
of arrival (ETA).
Additionally, navigation systems tends to be more
personal, i.e. recording you preferred route, your
driving routines to predict where you want to go and
customize the routing experience accordingly.
This can lead to very sophisticated experience. For
example, in a scientific paper a team of Yahoo! research
in Barcelona described how to calculate the most
beautiful route instead of the shortest or the quickest,
using metadata of geolocated Flickr pictures.
In another example, a leading car manufacturer is
working on a special routing algorithm based on
pollution data to be used by asthmatic patients.
All of that obviously requires connectivity, large
databases and a fair amount of processing. Therefore it
will ultimately become impossible to have the routing
taking place in the car. The future of navigation is off-
board routing, taking place in a cloud and sent to the
dashboard - via a phone or not.
MOORE’S LAW AND IN-DASH
OBSOLESCENCE
As mentioned earlier, technologies such as MirrorLink,
CarPlay, and Android Auto are blurring the frontier
between mobile and in-dash navigation.
One could think that the two systems might co-exist.
And many car makers do.
But the problem is the difference of lifecycle between
automotive devices and consumer’s smartphones. While
consumers are changing handset every two to three
years, the average age of a car is 8.6 years in Europe. And
when a new car is hitting the dealership its electronics
specifications have anyway often been decided two
years earlier; i.e. two generations of phone away.
It is therefore unlikely that in-dash systems can
compete in this race. The best they can do is probably
to stay on the edge of sync standards to keep displaying
smartphone apps over the lifetime of the vehicle.
Obviously this trend towards a phone-enabled in-car
digital experience is not going to realize to its full
potential overnight.
With a bit less than 250 million passenger cars on
the road in the EU and only 14 million new cars per
year, changes are indeed going at the speed of metal
corrosion rather than the speed of the web economy.
THE FUTURE OF LOCAL SEARCH & POIS
Local search is also an area where there is a lot
happening in the navigation market. Traditionally,
points of interest (POIs) databases have been the
business of digital map vendors (TomTom, Nokia HERE),
local yellow pages and business directories and, of
course, Google. But new players have come to this
market, particularly social platforms like Facebook,
Foursquare, Tripadvisor or Yelp.
Two other players are also worth mentioning:
Openstreetmap and Factual.
Dubbed the wikipedia of maps, Openstreetmap is a
worldwide map database built by more than 1.7 million
volunteers. In addition to road geometries, building
footprints and many other details, the database
includes millions of points of interest all over the world,
updated by locals.
Factual is a Los Angeles based start-up created by Gil
Elbaz, whose previous startup was bought by Google
to form Adsense. Using open source data, web scraping
robots and machine learning technologies, Factual has

Page 7
gathered in its database more than 65 million local
businesses and POIs in 50 countries.
Adding to these two, there is a number of vertical
players such as Parkopedia for parking data, Navx for
fuel prices/fuel stations and charging stations or Open
Tables and La Fourchette (thefork) for restaurant
booking that have developed “niche“, high quality
content databases.
The virtue of these vertical players is not only to offer
comprehensive data but also a depth in this content
and, for some of them, the capacity to transact. The
location of the nearest fuel stations is nice but getting
the cheapest one is better. Finding a restaurant is good,
but booking it and getting a discount is a must. The
same applies to parking, charging stations, etc.
As the number of POI sources enlarges there is
obviously a need to aggregate these databases and
feeds and mash them up in a meaningful way. Digital
map makers are playing this role as they have done in
the past, but they are not the only one. Some navigation
software vendors are doing their own content sourcing,
aggregation and cleansing. And there are new players,
such as for example real-time traffic provider INRIX,
that is aggregating and reselling fuel prices, parking
location and more to car manufacturers which want to
limit the number of their suppliers.
As a consequence, this area continues to be a moving
field, as new crowdsourcing techniques and social
networks are emerging.
Another significant advancement in local search for
navigation is voice. Performing a search on a navigation
device is difficult with a keyboard but not anymore with
systems using natural language recognition. Therefore
one might expect the number of local searches
performed by driver to grow sharply as the technology
gets completely intuitive and smart enough to grab the
context of your question.
THE CHALLENGED MONETIZATION OF
MOBILE NAVIGATION
Navigation is de facto following the general trend of
app stores: freemium and advertising. While freemium
works well, as demonstrated by Sygic and a few others,
advertising is harder.
Indeed, the advertising business model has not proved to
be hugely successful for navigation vendors until today.
Looking back at the reasons, this has mostly been due
to the lack of scale of each player alone in this market
and the lack of advertising inventory adapted to this
type of app. NAVTEQ Media solution (2009-2010)
was built to answer this problem, i.e. as an advertising
network offering native formats and calls to action (i.e.
“click to navigate“) to advertisers that were built in the
workflow of navigation, with a scale offered by multiple
partnerships with app developers (ALK, NDrive,
Navigon, Appello Telmap - and obviously Nokia Maps -
were part of it).
But this was a bit too early in the mobile advertising
game and the project was killed by Nokia that did not
have the resources to invest in this new business.
One exception though is Mappy (France). The
subsidiary of the French Yellow Pages company SoLocal
(formerly Pages Jaunes) launched a free GPS navigation
application (powered by software from NDrive) end of
2011. The app, free to the end users (700,000 unique
monthly users), is monetized by merchants that buy
preferred placement in the prominently displayed local
search feature of the app. Mappy GPS Free comes as an
additional feature to the local advertising products sold
by hundreds of SoLocal sales representatives. A good
community of users and feet on the ground to sell ads is
the right combination.
Another exception is Waze, that has developed
native advertising formats well integrated in the app
workflow, for example with starting when the vehicle
is idle. Its reach is large enough to attract advertisers,
particularly in verticals such as quick restaurant
services, car retail, repair shops, or fuel vendors.
While many seem reluctant, at least one car maker has
already started to adapt to this digital advertising trend.
At the CES trade show in Las Vegas, early 2015, General
Motors unveiled AtYourService: “a commerce and
engagement offering that connects drivers with retailers
and merchants on their drive, providing information,
convenience and money-saving values tied to their
specific destinations,“ the car manufacturer said.
The trend goes definitely towards advertising in the car,
which is by the way as old as listening to commercials
on radio in a car.
© NavAds 2015 | All rights reserved | www.navads.nl

NavAds-Whitepaper-v3

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