Will Smart Phones Crush the Stand-Alone GPS Market?

Includes: GRMN, TMOAF
by: Eric Savitz

The days of the stand-alone portable navigation device market are numbered.

By 2014, according to research firm iSuppli, the market for PNDs will be eclipsed by GPS-equipped smart phones. In 2009, the firm says, there will be 114 million PNDs in use, compared to 57.8 million smart phones. But by 2014, the numbers will flip: 305 million smart phones will be in use, versus 128 million PNDs, according to a forecast by iSuppli.

In a statement, iSuppli analyst Danny Kim notes that smart phones were not previously seen as a threat to the PND market due to poor phone battery life, unclear pricing structure and inferior interface design. But he says that as the smart-phone market evolves, those issues are being resolved. New smart phones, he says, offer better GPS integration, better usability, larger screens, built-in connectivity - and new GPS-enabled applications. (He counts 8 GPS applications for the Apple (NASDAQ:AAPL) iPhone alone.) By 2011, Kim believes, almost every smart phone will include GPS functionality.

And here’s a sobering thought for investors in the space: iSuppliu thinks that from 2009 to 2013, the number of TomTom (OTCPK:TMOAF) and Garmin (NASDAQ:GRMN) PNDs in use is not likely to change significantly. “The year 2009 marks the dividing line when sales expansion for the PND slows as the product moves from the growth phase to the maturity stage of its life cycle,” iSuppli contends.

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