Google recently introduced a free GPS navigation system for some cell phones that provides turn-by-turn instructions very much like subscription GPS services. Industry analysts predicted that if the free service is popular, it could negatively impact sales of GPS navigation devices and subscription-based GPS services provided by cell phone carriers.
“There’s no doubt that those guys are going to be disrupted,” said Greg Sterling, an analyst with Opus Research.
Google’s chief executive, Eric E. Schmidt, said recently that he did not regard his company’s new service as disruptive to the industry. He claimed that it would be a windfall for consumers facilitated by the popularity of Smartphones and easy access to the internet. “Obviously we like the price of free because consumers like that as well,” he said.
He said that he was not concerned that offering GPS service free would create more enemies for his company. “As long as you are on the side of consumers, you’ll be fine,” he said. The new service will be incorporated into the newest build of Google Maps for Mobile, which will be released along with Android 2.0-the latest version of the company’s operating system for mobile devices. Google executives expressed hope that the new GPS service in Google Maps for Mobile would become available on Apple’s iPhone and similar devices. Google did say advertising in the future might support its free GPS navigation system.
Analysts with Forrester Research say that 21 percent of American adults currently own a GPS navigation device and they expect the market for them to continue growing at 33 percent a year for the next five years. However, by 2013, phone-based GPS navigation-more popular with younger customers-will dominate the market and analysts expect Google’s entry into the industry to expedite this transition.
“People are going to be moving to the phone-based solutions, and if it is free, they are going to be moving even quicker,” said one Forrester Research analyst. Many personal navigation devices cost from $100 to $300. Navigation services offered by major cell phone service providers like Verizon Wireless and Sprint cost around $10 a month, but these services are usually bundled in packages with other services.
Mobile applications that exploit a user’s location are becoming increasingly important and valuable to companies, so the mapping data has become a valuable strategic asset. Google recently began creating its own digital maps in the U.S., ending a contract with map data provider TeleAtlas, owned by GPS navigation device maker TomTom. A year earlier, Google had chosen TeleAtlas to replace Navteq, a map data provider that Nokia acquired for $8.1 billion in 2007.