Kitt: "Buckle up Michael, we’re about to jump the shark"
Saw the news the other day that Mio, the folks that brought us the Knight Rider personal navigation devices, are shutting down their U.S. offices. Seems that it will take more than a retro ’70s tv show themed device to make it in todays competitive PND market.
Wait, I know… maybe a retro 90′s book brand instead! If Knight Rider wasn’t your thing then why not the lovable, easy to understand for Dummies branded PNDs for those with an eversion to all things technical. Yes, seriously there is a for Dummies line of personal navigation device… evidently it goes for as low as $89.99 at your local CVS.
Watching the developments in the PND market these days feels an awful lot like watching the waning episodes of Happy Days where fresh out ideas, desperate for sale and wanting to milk a trend for all its worth, while doing as little new innovative work as possible, we’re seeing folks resort to placing cheap, easy and desperate bets to delay the inevitable.
Can the GM Kitt 2010 concept car be too far off?
So does this mean we’re reaching the end for PNDs in general, or is there another explaination? I am sure many of you have seen this before but there is a company called Gartner which is a technology research and advisory firm which looks at stuff like this. A while back Gartner came out with this idea of the Hype Cycle to explain how new technologies gain and grow adoption through a number of cycles… most notably that there is an early period of frenzy and excess public enthusiasm which ultimately hits a wall, followed by a period of disillusionment before the technology revitalizes itself, often in a more useful and widespread way.
In terms of GPS and location awareness technology, I suspect that we are passing from the irrational exuberance stage around navigation and into the retrenchment phase where the next more powerful incarnation is currently being formulated.
While many companies at this point are becoming dissolusioned with the future prospects for navigation devices, there is a new breed of companies (and some new innovative products from old companies like Garmin) that are busy layering in search and social networking capabilities to take-up where the “navigation only” systems left off, as they realize that there are more broad benefits from location awareness then knowing where you are, where you want to go and how to navigate there.
The world always just seems to zig, when everyone is calling for it to zag.
On a related note, I noticed the news out of the New York auto show where Ford unveiled its Transit Connect service (which already includes some gimmicky RFID features) and GM its new internet and wi fi offering which will bring internet connectivity to their latest vehicle lines… so maybe we will have connected PNDs afterall, just with your Caddie providing the Internet connection rather than device makers like Garmin.
NuviFone: NuviNirvana Or NuviNightmare for Garmin?
Garmin had their 3Q quarterly earnings announcement yesterday, and amid all the revenue, earning and profit hullabaloo, they also announced “Game On” for the launch of the Nuvifone in the first half of 2009.
With GPS introduced as a standard feature in the new 3G iPhone in June and the more recent announcement of the availability of the Android G1 phone from T Mobile, there was the feeling among some that maybe Garmin would have a change of heart and take the opportunity to holler “Car!”, grab their ball and make a run for the house and never come back out. But no, the game is still on.
While I was, and still am, quite excited about the prospects of Garmin bringing their NuviFone to market, six months ago I would have been one of the first in line, but now I have since become a happy iPhone owner and now I am not so sure I’ll be making a change anytime soon. And when the subject comes up about Garmin entering into the super competitive smartphone market, what I mostly hear from industry type folks is “what the hell are they thinking?”
So what does Garmin have going for it to think that it can make a good business out of developing and launching a location centric smartphone? Some thoughts:
Destination: NuviNirvana
My guess is that Dr. Min Kao’s thinking went something like this:
-Despite what some people think, creating a great turn by turn navigation experience is as close as it gets to rocket science in the consumer electronics space, and we think we do a pretty good job at manipulating complex technologically to create awesome consumer experiences, so how hard can it be to go do a phone?
- Mobile location awareness is really the next big thing that will change everything about the mobile phone experience, people just haven’t been able to truly experience it yet because those other losers bury GPS functions deep in the deck next to the calculator and the latest release of Bejeweled. Make it front and center and people will eat this stuff up!
-The market was headed toward connected PNDs anyway, and there is no way in hell that we we’re going the MVNO route… no one will pay a monthly fee on their PND and I just don’t want to deal with that mess. Wait, I know, let’s just add in the original killer app of voice calls to our PND and call it a phone instead, people have no problem paying monthly fees for phones.
-We’ve already invested so much in developing manufacturing and distribution capabilities and those guys are going to get bored soon if all we’re selling is a few million navigation devices, these guys need more stuff to manufacture and distribute and world wide demand for phones is something like 2.3 bazillion…. If we can just get 1% of that market we will all be rich! 
Destination: NuviNightmare
Meanwhile in the other corner, the “have you heard of a little company called Motorola” crowd, where the argument goes something like this:
-Are you insane! Even the people who have been in the phone hardware business for years and years, no longer want to be in the hardware business anymore. It’s turning into a low margin, commodity business. Customers are fickle, and want to pay all of $20 for a phone that does everything but wash the car for you.
-Android and the iPhone are rapidly changing the game. Customers no longer expect to be able to do 4-5 things on their phone like make a phone call, check email, send a text, etc. They now expect to be able to do 500 things including… check in on Facebook, watch the latest YouTube video, browse their web photo collection, read the newspaper, trade stocks, listen to music, all while playing real-time head to head mobile AirHockey against their roommate.
-Yeah, you may know navigation, but this ain’t navigation and you’re a couple of decades behind in learning what folks want from their phones.
-Want to do business in the U.S? Well, remember those millions of little guys who you once considered your customers, well no more, now you have one big customer, meet Mr. Carrier.
Well so far, NuviNirvana seems to be winning the battle at least among the folks that matter, Min and crew. But I am frankly not sure what I think about the whole thing. But I do know that there are some things that could really make this interesting:
-An Android Nuvifone. This would solve the problem of not being able to have those 500 different apps that could put the NuviFone at a disadvantage. Not sure how feasible this would be with the way that Garmin (not unlike Apple) really likes to keep a stranglehold grip on the user experience. But undoubtedly an interesting partnership.
-Garmin isn’t thinking Navigation, but instead a portfolio of services built on top of location awareness. In other words, they have downloaded, played with and called the developer of every application in the iTunes App store that makes use of location data. Google search is certainly a start, but hopefully is just one of dozens of similar partnerships.
-Garmin moves away from its roots and has some sort of back up positioning besides GPS for indoor and other GPS compromised environments.
-Garmin is aggressive in implementing features that not only allow the owner of the phone to know their own whereabouts and what is around them but to broadcast out their whereabouts to others with a robust set of security controls of course.
-Some technological innovation that can allow the GPS or other location identifying technology to remain always on in the background without killing the battery. There is a big difference between this passive vs active location awareness and the types of services that can be offered.
Stay tuned… maybe Garmin can pick and up run with what Apple started.
Can Best Buy Do PNDs?
I saw the news recently that Best Buy plans to introduce its own line of personal navigation devices under its Insignia brand expected to be available in stores October 19.
Garmin Update
In case you missed it Garmin was out with results this week… TomTom as well, but I’ll try to get to them later:
In addition to the official slides and announcement here are some random tidbits from the Q&A session of the analyst call for Garmin from the call transcripts
- 2007 sales up 80% over 2006
- Auto category sales (Garmin includes PNDs in this category) are now nearly 75% of the company’s sales versus 61% a year ago… in other words sales of Nuvi’s are on fire.
- Margin was down but better than internal estimates, in part due to higher than expected geographic mix, ie more sales in the U.S. where margin is better.
- Speculation that overall PND penetration rate could be in broad range of 20-50%
- Expect 20-25% market share in Europe
- Expect additional 20% price reduction in 2008, offset partially by 10% reduction in component costs, with low hanging fruit in components being display and Flash memory
Nuvifone
- Doesn’t expect Nuvifone to cannibalize PND sales
- No carrier agreements for Nuvifone, they’re actively having many discussions, and would like as many carriers as possible
- Expect to use non Garmin manufacturing facility for the device
- Expect Nuvifone margins to be roughly the same or slightly lower than current PND margins
Nuvi Phone
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