GPS Evolution: TomTom and Garmin look to the future

With demand for standalone GPS receivers dwindling, Garmin and TomTom are attempting to find new and exciting ways to revitalize their sagging fortunes.

GPS receivers are helpful, handy tools for navigation, invaluable for long trips through unfamiliar terrain. Over time, however, the market for GPS receivers has become bloated, with the big three manufacturers (Garmin, TomTom, and Magellan) turning out large numbers of nearly indistinguishable models with superfluous features and functionality that can overcomplicate the experience.

The rise of the iPhone and its new, integrated GPS-functionality presents a real problem for GPS manufacturers. As a convergence device, the iPhone is positioned to be a GPS killer, taking the best parts of the GPS experience and compressing them into a popular all-in-one device. The three manufacturers have all mounted different responses to this emerging threat. Magellan, it seems, has accepted its fate and resigned itself to death. Their half-hearted attempts to make their devices more appealing are inadequate and unconvincing. TomTom is playing it safe by attempting to co-opt the iPhone's popularity, a smart move in the short term but with potential long-term issues. Garmin is taking the biggest risk, one that promises a huge pay off or, more likely, almost certain disaster.

Taking Risks: The Garmin Nuviphone

Garmin is king of GPS, and though they may not fear TomTom or Magellan, they seem absolutely terrified of Apple. The inclusion of GPS functionality on the newer iPhone models was almost an afterthought on Apple's part. They didn't even bother to include any kind of navigational software. Nevertheless, it was an opening salvo that sent Garmin to battlestations. They wisely saw it as the beginning of the end for standalone GPS receivers, similar to how "smart" phones consumed the market for PDAs years ago. Rather than get caught unawares, stuck to a dying business model the way Palm did when their PDAs were made obsolete, Garmin decided to fight back, the hard way.

The Garmin nuviphone is their attempt to challenge the iPhone's supremacy. The iPhone is a cell phone that happens to have GPS, but the nuviphone is designed to be a GPS that is fully integrated with a cell phone. Though a clever concept, the project has been plagued by delays and setbacks. It was first announced almost two years ago, and is currently scheduled for release in the last quarter of 2009, though it's still unclear whether they'll be able to meet that deadline.

We've written before that we're not confident in the nuviphone's chances against the iPhone, but wouldn't mind being proved wrong. They'll have to actually release it for that to happen, though.

Playing It Safe: TomTom iPhone App

Though Navigon has already beaten them to the punch, TomTom has become the first of the "big three" GPS manufacturers to release a turn-by-turn navigational application for the iPhone 3G and 3GS. In addition to the core application, which is available for the U.S. & Canada, New Zealand, Australia, and Western Europe, TomTom has also announced a special car kit that is geared toward making your iPhone better equipped to provide driving directions. The car kit includes a windshield/dashboard mount so the iPhone can be elevated and have clearer satellite reception. It also charges the phone and amplifies the iPhone's speaker and microphone capabilities.

The GPS software costs $99.99 in the U.S. & Canada, and the car kit comes in at just under $200. All together, that's a little more expensive than the average brand-new standalone GPS receiver, but the convenience of an all-in-one device might just be worth the price. The app and car kit together still are much more expensive than the entry-level TomTom GPS receivers, however, whose capabilities the TomTom GPS app will most likely mimic.

TomTom is adhering to the old adage, if you can't beat 'em, join 'em. Rather than compete directly against the iPhone and invest a lot of capital, time, and energy into an expensive device like a cell phone, they've decided to concentrate on the software end of GPS navigation. It's a safe bet, for now, as it will eliminate the costs associated with producing physical devices. That said, the barrier to entry for competition is now much, much lower. With the GPS hardware and the delivery/distribution system already taken care of thanks to the iPhone and the iTunes Store, all a company needs is a compelling new take on GPS software to be a serious competitor to the "big three." It's sure to be good for consumers, driving down prices and spurring innovation, but may not be so great for TomTom and their peers.

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