Free: A Good Price for Turn-by-Turn
November 4, 2009 By: Alan CameronConsumer OEM Newsletter, November 2009
The big news of the month or perhaps the quarter, Google’s beta release of free, repeat free, Google Maps Navigation for Android 2.0, does not constitute the death knell for standalone GPS devices, as has been widely touted. It does sound a clarion wake-up call for those manufacturers, led by Garmin and TomTom, to improve their services and de-groove their pricing structure. And it does play the Taps bugle ditty for navigation charging of any kind by wireless carriers and LBS providers. As I among others have long but quietly said, charging for LBS will ultimately head south. The best business case for location is advertising, advertising, advertising.
Hello everyone, I’m Alan Cameron, sitting in this month for Stephen Colwell who is away. And away we go.
Google’s latest foray follows its playbook: barge into potentially profitable and somewhat captive markets with a free offering, backed up by all the advertising eyeball-weight Google has to throw around.
Here’s the news, released October 28, in two nutshells:
Google announced Google Maps Navigation (Beta) for Android 2.0 devices. It looks very much like other GPS navigation systems, with 3D views, turn-by-turn voice guidance, and automatic rerouting. However, according to the company, it differs from all other nav offerings in that it was “built from the ground up to take advantage of your phone's Internet connection.”
Said Internet connection makes possible automatic phone updating of maps and business listings; a relatively simple search function, followed simply by pressing “Navigate;” voice search; live traffic data over the Internet; search along route for destinations/businesses/parking and so on when you’re already rolling; high-resolution, 3D satellite imagery of upcoming route; street view, showing photo of an upcoming turn or final destination, for example, with imminent route overlaid.
The friendly, helpful Googlers made a video demonstration.
So far (but not for long, I’ll bet) the new free nav service is available only on Android 2.0 handsets, and so far (ditto) only one of those has reached market: the Motorola Droid on Verizon. Initially, only U.S. users can access the service.
Moral of the Story. Google can do this kind of stuff for free because its advertising, goofy as that appears at times, pays the bills. In October the company announced that its third-quarter revenue (predominantly advertising-driven) rose to $5.94 billion, up 7 percent from the same period last year — when nearly everything else under the golden sun is down. Net income rose 27 percent to $1.64 billion. Google accounts for roughly a third of all online ad spending in the United States. At least some of its ad megasystem is based on an ad auction model so brainy I can’t even pretend to understand it. But apparently it makes money, or is on course to do so.
This gives further credence, were any needed, to the view that advertising (NOT fee for service!) will be the financial key to provision of navigation services, and probably for all location-based services. Just as it is, or is about to become, for most online offerings.
Hasn't it been said in so many ways that GPS is very like the Internet? Started as a military project, taken over by the civils, never envisioned such an explosion of uses, changed the way of modern life . . . Here's one more way.
It also lends weight to the coming behemoth, the converged personal device: phone, navigator, mini- or not so mini-computer, email, everything. All in one handheld. This has been foreseen at least since 2000, when I remember editing a “Directions 2001” opinion-editorial submitted to GPS World magazine, and it probably predates that as well.
See? This turned out to be a Consumer OEM column after all.
I am reminded of nothing so much as Pia Vuohelainen’s comments at the Growing Galileo Conference, sponsored by the European GNSS Supervisory Authority in Brussels in January of this year, on a panel that I moderated concerning the GNSS business climate, sat nav market prospects for GPS business service now, and future Galileo market-readiness. At that time she was Partner Manager, Partner & Developer Programs, for NAVTEQ, a provider of digital maps acquired by giant Finnish handset manufacturer Nokia.
She said at the conclusion of the panel, which had exhaustively treated willingness-to-pay for navigation services, “Advertising is always about the numbers game. From the advertisers’ perspective, they still require a large number of eyeballs in order to get into a certain model. At the moment, we are lacking an advertising aggregator model for all of our services within Europe, but there will be companies going into that space.”
Google has now entered this space. Watch it.
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