Date: 06/01/2011

ABI Research finds the trend of software taking half of the total navigation market by 2016

ABI Research finds the new trend in navigation market, where navigation solutions are moving in the direction of software based-solutions from Hardware based solutions.

ABI reports in 2009, almost 95% of revenues came from established, hardware-based technologies such as factory-fitted navigation and unconnected PNDs. Software-focused markets such as handset-based navigation and connected PNDs were negligible. Where as in 2014, ABI estimates more than 60% of the installed base will consist of software-based navigation solutions, and the off-deck location-based services (LBS) market will be primarily funded by advertising rather than direct fees. In 2016, ABI expects the revenues will be a 50:50 split.

"For years (world economic crash aside) the in-car navigation market has grown relatively unabated," says ABI Research senior analyst Patrick Connolly. "It was a niche within an established market that was large enough for everyone to succeed concurrently. However, with penetration rates in some regions approaching 50%, it starts to become more competitive. The result is a clear transition away from pure hardware sales to software based-solutions and revenues."

Reasons quoted by ABI for this trend include:

In-dash ASPs are falling as companies look to open up the market, driving down hardware revenue.

Connected PNDs will become commonplace as the likes of TomTom and Garmin innovate and drive new revenue streams.
The arrival of application stores and free navigation will help to drive uptake and revenue in the handset-based market.

By 2014, carrier navigation will be evenly split between subscription and free (largely as part of data plans).
Location-based advertising will create a viable alternative to subscription services.

Practice director Dominique Bonte concludes, "Finally, this market is evolving to support new revenue sources. Those that fail to move with the market will be left behind."