Q4 GPS Device Shipments Jumped 148% Year on Year

March 7, 2008

Not only does growth in the GPS navigation industry show no signs of slowing, it is actually increasing, according to the latest figures from market research firm Canalys.

Year-on-year growth in mobile GPS navigation device shipments stood at 148 percent worldwide in the fourth quarter (Q4) of 2007, and represented a stable 90 percent total device shipments, Canalys said. "A big factor in the continued success of the personal navigation device (PND) market is the U.S. market," said Chris Jones, Canalys VP and principal analyst. "Seasonal promotions — particularly around Black Friday and the Thanksgiving weekend — drove huge volumes.

"These promotions saw PNDs drop, albeit temporarily, to price points as low as $80," Jones continued. "Garmin, Magellan, Mio, Navigon, TomTom, and others had products selling at substantial discounts. While it is good to get the volume, the problem this creates is it gives U.S. consumers the idea that satellite navigation needn't be very expensive, and predictably, many price points have not sprung back to their pre-discount levels."

In fact, both TomTom and Garmin have been beaten up by investors worried about future PND price points.

Canalys estimates that around 6.7 million PNDs shipped in the United States in Q4, representing 55 percent of the total for the year. In Q4 2006 the figure was below 1.5 million, showing just how much the market has grown and the extent to which the United States, once tiny compared to the European market for such devices, has become a major arena for the many competitors in this industry, Canalys observed.

"Many vendors are finding it difficult to compete profitably given the rapid price and margin reductions we have seen in the market in recent quarters," said Tim Shepherd, Canalys research analyst. "Cobra, for example, announced its departure at the end of 2007, and there are many smaller vendors suffering as the market leaders increase their shares."

Looking at the market for all mobile GPS navigation devices (which includes smart phones that have integrated GPS and an activated on-board solution), Canalys puts market leader Garmin's share in the United States in Q4 at 47 percent, almost exactly where it was a year earlier. Garmin is followed by TomTom at 21 percent Magellan at 17 percent and then Mio Technology at 6 percent — the top four hardware vendors have more than 90 percent of the market. A year earlier they had 80 percent between them. "In 2006, vendors like TomTom and Mio discovered they could have sold even more product around Black Friday than they did, if only they had managed to put more into the channel," Shepherd added. "In 2007, they, and others, stepped up their activity to take greater advantage of that seasonal U.S. consumer demand."

While the U.S. market may have boomed in 2007, the Asia Pacific (APAC) region wasn't far behind in terms of growth rates, with Q4 2007 shipments of around 1.7 million mobile GPS navigation devices representing a 137 percent rise year over year, according to Canalys. The contrasts between this region and the U.S. couldn't be more marked, the market research firm says.

"In APAC in Q4 2007, the top four vendors accounted for less than 40 percent of all shipments," said Rachel Lashford, the Singapore-based manager of Canalys in APAC. "And while the PND is still the largest category in volume terms, portable media players and converged devices, such as smart phones, already represent more than 20 percent of the market."

This different landscape is also evident in the hardware vendor brands that appear in the top four and the narrow distance between their market shares. TomTom was the leading brand in Q4 2007, but this was before the formal merger of Mitac's Mio and Navman subsidiaries, which took place in January. Mio and Navman's combined shipments would give the merged company the number one position. Canalys estimates TomTom had 10 percent of the APAC market, marginally ahead of Navman and Thinkware, with, somewhat ominously for the PND vendors, Nokia in fourth place with just under 9 percent share. Mio was in fifth place.

"South Korea, Australia, and China combined currently represent 80 percent of shipments in the region," Lashford added. "But Taiwan is the fourth largest market and home to many of the ODMs that are so vital to this industry, hence our running a forum in Taipei on May 15, to bring both international players and local producers together to discuss future trends and market opportunities."

With year-on-year growth of 86 percent in Q4 2007, the combined Europe, Middle East, and Africa (EMEA) market is a laggard in comparison to the other regions, but few industries can boast such tremendous, sustained performance as has been seen in the navigation business there for the past few years, Canalys says. In Q4, half of all mobile GPS navigation device shipments worldwide were in EMEA. A year earlier EMEA was two-thirds of the global total, and it remains a highly lucrative market for many vendors.

The top four only hold 65 percent of the market, a situation that has changed little over the past few quarters. TomTom held onto its clear lead in Q4, with 32 percent share, ahead of Garmin at 17 percent and Nokia at 11 percent thanks to the success of its growing portfolio of Symbian smart phones with integrated GPS, the market research firm said. Mio and Navman took the fourth and fifth spots.

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