Google, Garmin, And Free Navigation

Posted by: Arik Hesseldahl on October 29, 2009

Six years ago this week, and before I worked for BusinessWeek, I wrote this profile of the GPS company Garmin in Forbes Magazine. (I have a scan of the print version of the story here.) I thought of it this morning as I read Rob Hof’s post as well as today’s front page story in The New York Times about how about how Google’s introduction of free turn-by-turn directions to its Android smart phone platform is upending the navigation device industry.

For the story six years ago, I asked Garmin co-founder and CEO Min Kao about the competitive threat or business opportunity he saw from GPS-enabled wireless phones. Phones, he said, were the kind of “commodity market we want to avoid.” Motorola and Nokia and other phone companies were just starting to embed GPS chipsets on phones in 2003, and and some phones could already give you turn-by-turn directions, though nothing as good as what you could get from a Garmin navigation system mounted on the dashboard of a car. Garmin was at the time starting to push the iQue 3600, a Palm OS-based PDA (remember those?) that had all the capabilities of one of its navigation systems. As you can see, it didn’t sell terribly well and has long since been discontinued.

Fast forward four years to late 2007, when I wrote this story for BusinessWeek on how wireless phone companies were teaming with services like Networks in Motion and TeleNav to provide their own wireless navigation services on their phones.

Now Garmin is trying its hand at the smart phone business. The results, are, as Steve Wildstrom wrote recently, not terribly impressive. Meanwhile Garmin’s biggest rival TomTom — a company that was not on my radar screen until 2006 — has turned Apple’s iPhone into a powerful in-car navigation device.

Garmin was the up-and-coming navigation company in 2003, and it got that way very quickly. At that time it had been only three years since President Clinton had ordered a permanent end to the policy of Selective Availability on the Global Positioning System constellation of satellites. This policy, which had been in force since the launch of the system, required that civilian GPS signals be made deliberately inaccurate so that they couldn’t be used against US forces on the battlefield. While the civilian signal was good enough for hiking and hunting, it wasn’t accurate enough to provide turn-by-turn directions in a car.

As soon as that policy change made civilian signals more accurate, an industry sprung up around in-car navigation. Automakers started building sophisticated nav systems into dashboards, and that companies like Garmin and TomTom, Magellan, and others sought to compete in the aftermarket, and even jockeyed for the attention of Detroit. Garmin and TomTom are the two biggest players, and every holiday season compete like crazy in the retail business.

But the rate of creative destruction of business models in the navigation business has been nothing short of shocking, even for the fast-moving tech industry in general. Garmin and TomTom made paper maps all but obsolete with their devices. Wireless carrier-based services quickly rose after that to challenge them. And now, both are being challenged by Google and its free phone-based offering. This has all happened in less than a decade.

Earlier this month, market research firm iSuppli noted that sales of personal navigation devices — those Garmin and TomTom dashboard devices — had entered a period of “slowing growth,” and that sales may actually decline this year, and remain flat after that. And in September, iSuppli projected that navigation-ready smart phones will surpass PNDs by 2014, a ratio of more than 2 to 1. ABI Research said earlier this year that GPS will be included in 9 out of 10 handsets within five years.

One reason for these relatively quick turns of fate is the relatively low barrier to entry in the navigation business. The civilian GPS signal is provided to the entire world free of charge, courtesy of the US taxpayer to the tune of about a billion dollars a year. GPS chipsets that can be built into phones, or frankly any other device for that matter, have been coming down price for years. If you want to build a better navigation device, there’s not much to stop you. You’ll also need a source of mapping data, and for that there is Navteq, now owned by Nokia, and TeleAtlas, now owned by TomTom.

There is certainly a compelling case to be made that if free is the default price for navigation on a smart phone, as it appears it will be with this new Google service, then this is bad news for the Garmins, TomToms, and TeleNavs of the world. The 7-dollar and change drop in Garmin’s stock price over the last two days certainly reflects that.

But will the Google service be as good? Garmin and TomTom have a lot of practice in providing directions, and have honed their skills over the years, and build devices that are highly reliable and accurate, and which don’t rely on a cellular data signal at all. That may turn out to be a key marketing point for the PND industry. When you’re driving in the middle of nowhere and outside of the range of a cellular signal, the last thing you want to worry about is getting lost. Either way, I’ll be interested to compare Google’s service side-by-side with a dedicated PND and see which is better.

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Reader Comments

SAM CARTER

October 29, 2009 05:15 PM

HEY I own A garmin G .P. S.and I never get lost,
some of my friends own tom tom but now they have Garmin I have the nuvi 350
but I can not replace it.
bye

Robert

October 29, 2009 06:26 PM

I'm excited about it to a degree there are still drawbacks.

1. I still have to buy a nearly $500 phone ($200 with 2 year contract) and
2. get a data plan to use the service since it's streaming it over the 3g Network,
3. thus I need to remain an active Verizon customer to use it.
4. I also have to be within cell-phone range of a tower.
5. I haven't learned what happens on the Droid phone when someone calls the phone in navigation mode. Online demo videos don't answer that question.

I'll use my phone as a phone and leave the cheap GPS in the car. Sure google is great and fast and it costs about the same as a GPS standalone device with similar features, but that data charge and lack of freedom from Verizon is annoying.

Robert

October 29, 2009 06:26 PM

I'm excited about it to a degree there are still drawbacks.

1. I still have to buy a nearly $500 phone ($200 with 2 year contract) and
2. get a data plan to use the service since it's streaming it over the 3g Network,
3. thus I need to remain an active Verizon customer to use it.
4. I also have to be within cell-phone range of a tower.
5. I haven't learned what happens on the Droid phone when someone calls the phone in navigation mode. Online demo videos don't answer that question.

I'll use my phone as a phone and leave the cheap GPS in the car. Sure google is great and fast and it costs about the same as a GPS standalone device with similar features, but that data charge and lack of freedom from Verizon is annoying.

Stephen

October 29, 2009 08:26 PM

The threat from Google is real. I am wondering how this will play into the android version of Garmin's next phone. Garmin is innovative but has been struggling as of late in the largest segment of their business (PNDs). Maybe they should read the writing on the wall, exit while they still can and focus their efforts in their other businesses.

Stephen

October 29, 2009 08:27 PM

I love my Garmin 255wt and admire the company but the threat from Google is real. I am wondering how this will play into the android version of Garmin's next phone. Garmin is innovative but has been struggling as of late in the largest segment of their business (PNDs). Maybe they should read the writing on the wall, exit while they still can and focus their efforts in their other businesses.

Shanks

October 29, 2009 10:12 PM

I agree! My Garmin c330 had been reliable so far over several trips of thousands of miles. Like you mentioned having no signal (which happens pretty much in the middle of nowhere)...would be the last thing I would want on my long trip...

Chuck Flink

October 30, 2009 12:28 AM

Remember Netscape and the "unique" concept of an "Internet Browser"... They did sell out for Billions just before Microsoft and a dozen others reduced the "unique technology" to a freebee given away with every cell phone, pc, game console.

It is shocking how fast technology evolves... now watch how fast the increasing taxes on labor to cover social security and the "new" health care system will obsolete much of the working class. Looking forward to living in a zoo? ...then you better become a technology researcher/guru.

...or unfortunately, a politician.

Bob

October 30, 2009 01:25 AM

Unless Google puts the entire continental US map on the device, its usefulness will be severely limited by travelling in and out of service regions and poor reception areas. This is from personal experience, if the maps don't load, its useless, period. Also I wonder what the turn-by-turn reliability is really like when you are dependent on getting map and directions updates wirelessly (Those freeway offramps come up pretty quickly and close to each other in big cities). I recently compared my simple Tom Tom to VZ Navigator, and the Verizon navigator sucked badly. Perhaps Vz realized this and decided to throw in the towel hoping Google would solve the problem. Now if you could load the Google map database of places into a Tom Tom /Garmin that would be excellent, since the best way to find places, especially places like a small hole in the wall restaurant is with Google maps, not the Tom Tom point of interest database, which is very deficient.

Johnny

October 30, 2009 01:36 AM

Google maps is the best mapping system in the world. I was recently in NY and used my android phone to move around the city's public transportation without any problems thanks my G1. When it was time to walk from one POI to another i was also able to get there without getting lost. When i rented a car and drove around the east coast i also relied on the G1 to indicate where to go (even though it didn't gave me turn by turn directions). I seriously dont see any reason why i would ever buy car GPS system. i will use my G1 for whatever directions i need be it car, public transportation, or walking.

Mark Ferraretto

October 30, 2009 01:59 AM

I wonder how much this development will affect Garmin. Garmin makes a lot more than in-dash GPS units. They make nautical and aeronautical units as well and also have non-GPS products such as glass cockpits for light aircraft. Google may intrude on their car GPS business but will it impact them that much?

Chris

October 30, 2009 02:27 AM

I have an iphone with the default map application ( google maps ). I have to say it sucks! Google maps on the computer allows you to reroute your travel path but even then if the final location is wrong then Google loses. I have used a garmin and it is far superior to the iphone for driving somewhere. It WILL get you there instead of iPhones pick the sid eof the street and hope it lines up the address you put in with the actual address or business you asked for. What Garmin needs to do is move into portable personal navigators that allow walkers and tourist to navigate not only roads but cities. Incorporate augmented reality like the iPhone and Palm Pre have as apps. Utilize the fact that they are better at anyone at navigation devices and they could come out of this as a winner. Either they can sell their service to bigger companies like Google or apple or Microsoft or they can create one that charges only for data and allows you to do everything a laptop/iphone does minus the phone.

Steve

October 30, 2009 02:37 AM

Listen up Garmin and TomTom... the law is getting heavier all the time on emailing, texting, phoning, etc, whilst driving... need I say more? It could be a sweet spot for you guys, show the law your here to protect the law!!

gerrrg

October 30, 2009 02:43 AM

When G1 first came out, the first thing I wondered, was why the included Google Maps didn't have turn-by-turn navigation. As anyone knows, you can use it to track your progress along directions from point to point, in map mode, but that was about it.

Now with Android 2.0, we will all get the app that should have been included from the beginning, IMO.

Of course, navigation on a cell phone screen is nothing like that on a dedicated 7" screen in an integrated car stereo systems, which I would think, is where the real growth will be for TomTom, Garmin and their industry.

Mark Holmstrand

October 30, 2009 03:13 AM

This is all really great fun. I remember back 15 years ago when a suveryor's GPS unit cost half a million bucks. Ten years ago they were just under $50,000. Now GPS is free, what fun!

I have Google Maps with GPS on my BlackBerry, but a Garmin unit sits on my dash, for now.

MeanEYE

October 30, 2009 05:49 AM

"When you’re driving in the middle of nowhere and outside of the range of a cellular signal, the last thing you want to worry about is getting lost."

Well that's not completely true... Many of Android (if not all) phones don't actually require GSM signal to locate them selfs. A-GPS is used (mainly) to assist in quick initial position locking.

brianwad

October 30, 2009 05:54 AM

How long before the phone storage contains a map set as backup to a lost signal?

I use Gokivo on my blackberry very successfully because of its traffic service and search capability even though I also have a Garmin. The turn by turn voice is very good.

The threat is very real.

MG

October 30, 2009 06:52 AM

I have a Samsung Omni cellphone here in South Africa. It has Google maps and Samsung branded Garmin Navigator. When I'm looking for a restaurant or shop I use Google then punch in the address on Garmin. Both have their uses. Now if Google could use GPS that would be handy.

ej

October 30, 2009 06:55 AM

Better, more mature, phone navi systems, like Nokia's do not need a cell signal - I have on my phone maps for all USA, Canada, Mexico, UK, Paris. My cell phone has both turn by turn and step by step (for walking). Additionally the phone works in conjunction with the web, I can sit at my desk plan routes, favorite destinations, find user recommended destinations and they sync with the phone via 3G or Wifi (new versions of maps also sync that way). The phone also connects to car audio system via bluetooth so I hear the directions clearly. Both of my cars have OEM Sat Nav - never use it any more. Additionally Nokia has free apps like Sports tracker that allows me to use GPS to track my workouts, PND's can't integrate into my life in this manner.

PNDs are irrelevent at this point.

ej

October 30, 2009 07:01 AM

Oh and if your phone has a real multitasking OS - my phone for example - and has pre-loaded maps you can answer a call and the navi will still keep working. Screens will update, it will show you where to turn, but call audio takes priority to navi instructions. The European phone based navi solutions surpass the current offerings we have here in the states

ken

October 30, 2009 11:17 AM

I use my phone gps when I travel - to find restaurants, hotels, ATMs etc. in a city. The gps is the killer app on the phone when I am in a different town. Between towns or in the woods, where there is no signal, my phone is a brick and is useless as a gps device. Phone GPSs will find a niche, but will never replace dedicated units completely.

HC

October 30, 2009 07:10 PM

Google could not and should not compete with Nokia and TomTom. And Garmin is the biggest loser.

This is because navigation can only be as good as the digital maps it runs on. You go to maps.google.com or maps.yahoo.com. You see that the map data are provided by 2 major digital map providers in the world, Navteq, now part of Nokia and Tele Atlas, now part of Tom Tom.

Google's computing cloud approach to navigation lowers the average cost. But if it threatens the survival of Nokia or TomTom, I am sure Google will eventually suffers from higher license cost of data.

Google has to share some revenue. Nothing is free. Nokia and TomTom is relatively safe. Garmin is good with GPS hardware, but without data, it is doomed.

Raj

October 31, 2009 08:47 AM

I recently went hiking in the Adirondacks - most places had no cell signal whatsoever. But my iPhone still picked up a GPS signal and let me navigate along pre-loaded maps.

It sucked that the maps were not updated but at least I could get GPS coordinates to use with my waterproof, non-battery powered rip-proof National Geographic trail maps.

For the iPhone to truly replace a dedicated GPS unit I need to be able to download and store map data for my route so that if I have no signal I can still navigate. The same is probably true for the other gps 'phones - cut the reliance upon the cell signal/data signal and the 'phone truly replaces the dedicated GPS.

bob

October 31, 2009 12:58 PM

I may have to buy a cell phone and a data plan to use Google's free GPS, but in all likelihood, I'm going to do that anyway, just so I can surf the web and check my e-mail.

Having GPS on my cell phone is a free bonus, as far as I am concerned.

Meanwhile, having paid several hundred dollars for my Garmin GPS a few years ago, I now find that my maps are out of date, and Garmin wants to charge me over $100 to update them.

And the update is only good for one device, so, if I own 2 or 3 devices, I have to pay a separate charge for each device.

In the long term, I will probably have no more than one GPS, for those days when I travel off the interstates, and rely on my phone instead.

I don't use my GPS to trek around the woods, and I suspect that most people who own one don't, either.

The long-term prospects for Garmin and the other dedicated GPS companies do not look good.

Phil

October 31, 2009 04:34 PM

I owned a PND then after I got the Sygic Nav software on my iPhone I put the PND on the "to Ebay" shelf in my office.... after 3 months of thinking whats the point of eBaying this hunk of junk I gave it to my Dad.

Seriously why would anyone buy a PND now. You are going to have a phone in your pocket if your reading this so why double up the hardware. I agree I want the maps stored locally but how hard is that for the largest supplier of mapping data to the world.

Mapping software is the only way forward and I agree with other posters that Google making this free will all but kill any company that cant survive on a software only business model.

Tom

November 1, 2009 12:25 AM

Sometimes device convergence doesn't make sense. I have a PND and a phone. I like having the PND on the dash so I can see it. I also like having battery power in my phone, the GPS drains the battery quickly. Also, phones don't always get full view of the sky in the car for navigation. My GPS on the dash has a much more sensitive GPS antenna...

If I need to navigate off the cuff, away from my vehicle the phone makes sense.

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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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