Why iPhone Navigation Is Expensive

Posted by: Stephen Wildstrom on June 19, 2009

Surprise and even some anger erupted among iPhone fans when they learned that the navigation app, Gokivo from Networks in Motion, would require a $10 monthly subsciption. It’s the first app to use Apple’s new in-app purchase caopability and Adam Frucci wrote in Gizmodo: “Bring on the sleazy, crippled apps begging for more money!” A comment to my iPhone navigation article said: “Tell people to avoid this app like the plague.”

The response shows a lot of misunderstanding about how both navigation applications and the iTunes App Store work. A lot of the grumbling about Gokivo stems from people’s resentment at having to pay 99 cents for an app that really doesn’t do anything until you sign up for a month’s service. But this oddity is required by the rules Apple has created for in-app purchase: “Free apps remain free,” as Greg Joswiak, Apple vice-president for iPhone and iPod marketing, puts it. To qualify for in-apppurchasing, Networks in Motion had to start by charging something for Gokivo, and 99 cents is the minimum Apple allows.

Beyond that, there's the question of why navigation is relatively expensive, whether its the $10 a month charged by Gokivo, the $99 asked by TeleNav for its BlackBerry App World program, or the similar price that TomTom is likely to charge for its upcoming iPhone app.

There are two ways to implement a navigation program. You can serve maps and driving instructions over the network, which is what Gokivo and programs like VZ Navigator do. Or you can download the database to the device. Each has its pluses and minuses. The network approach assures that you are always using the latest database and route calculation is usually somewhat faster. But if you go out of network coverage, you have no maps and no directions. On-device storage takes up a fair amount of memory and risks having out-of-date data.

Either way, you need a source of maps and a data base of directions, driving instructions, and points of interest. There are two main sources of maps, Navteq (owned by Nokia) and Tele Atlas (a TomTom unit) and they aren't cheap. The companies selling navigation services cannot simply build on top of the Google Maps application built into the iPhone and many other smartphones because Google's terms of service specifically prohibit its use for real-time navigation. There's a simple reason for this: Google's own arrangements with the map suppliers prohibit such uses. And of course, navigation services, whether on-board or network based, entail an assortment of other costs.

The bottom line is that navigation is a fairly expensive. I don't know if $10 a month or $100 for an on-board application are the right prices for the long run--I suspect that both will come down somewhat--but don't expect free or even cheap real-time navigation any time in the foreseeable future.

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Reader Comments

mark

June 20, 2009 05:36 AM

Gokivo should've provided a basic functionality for 99 cents- such as navigation limited to your specified home town (or 100 mile radius from a specified point), while charging extra for greater distances (more areas). Instead, the 99 cents provides nothing. That's why there's anger.

Unhappy customer

July 1, 2009 04:11 AM

I just switched to AT&T just for the iPhone! I travel slot and really need the navigation that has been available for free on my sprint phone for. Very long time now! This blows! I might be heading back to sprint after all!

Derek

July 2, 2009 04:51 PM

I would pay $100 easy for the TomTom as long as that $100 includes the cradle, extra GPS, and phone charger they have scheduled to release with it.

I hope that's true because I will go out and get one the day it comes out.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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