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GPS navigates onto holiday wish lists

The navigation devices are more popular than ever this year thanks to lower prices, better performance, and enhanced multimedia capabilities.
The Alpine PMD-B100 Blackbird portable navigation unit has a 3.8-inch digital touch screen, a built-in traffic receiver and transmits audio and voice commands wirelessly to a car's factory radio.
The Alpine PMD-B100 Blackbird portable navigation unit has a 3.8-inch digital touch screen, a built-in traffic receiver and transmits audio and voice commands wirelessly to a car's factory radio. Jim Seida /
/ Source: BusinessWeek Online

If all goes according to plan this holiday season, the constellation of global-positioning system satellites orbiting the planet will soon be talking to a wide array of newly unwrapped high-tech gifts, all of them designed to help users find their way from place to place.

Why the likely holiday surge in GPS-enabled devices? GPS equipment and services have been around for a long time. Navigation systems that offer GPS-based mapping and route guidance have been offered as add-on options by auto manufacturers for years. According to the Telematics Research Group, sales of those systems grew to 1.2 million last year and will likely balloon to 4 million by 2010.

But consumers are no longer waiting for the devices to be offered by auto manufacturers. Indeed, the market for personal navigation devices has exploded over the last two years. Those systems, made by the likes of Garmin, TomTom, and Magellan, offer the same features as those available in cars, but they're portable and cost anywhere from 50 percent to 80 percent less. The Consumer Electronics Assn. predicts that as many as 2.3 million such units will ship in the U.S. this year. Analysts say that would represent a growth of 100 percent from last year.

That growth is a reflection of the increasing popularity of a system developed in the 1970s by the U.S. Defense Dept., which continues to maintain more than two dozen satellites for public use. The network works like a broadcast radio station, receiving and sending location coordinates to GPS-compatible devices.

Another catalyst of growth is the falling price and improving performance of the computer chips that run the devices. "That chip that a few years ago cost $30 is now just $10," says Rich Valera, an analyst with Needham & Co. in New Jersey. "It's the economics of silicon — price comes down, performance goes up. The inexorable trend is, then, a proliferation of GPS devices."

Prices for popular portable navigation devices have dropped at the retail level as well, fueling demand. According to NDP Group, the average price of GPS systems dropped to $616 during the third quarter of this year. That's a drop of more than 30 percent, from an average of $863, since the same time last year.

All aboard the bandwagon
That price drop is also the result of increased competition and a drive to grow the market. Veerender Kaul, an analyst with Palo Alto (Calif.)-based Frost & Sullivan, says, "The manufacturers like Garmin and TomTom brought prices down because they wanted to expand volumes, but there's still a huge market potential given new competition and new value propositions."

Indeed, this year a raft of reputed brands jumped on the GPS bandwagon. Companies like Alpine, Audiovox, Clarion, JVC, Panasonic, and Sony announced they would produce navigation-enabled products. Market leaders, meanwhile, are branching into new services like real-time traffic, music, and other multimedia features.

Now, with prices at both the component and retail levels hitting new lows and consumer interest in GPS technology rising, some companies are offering new gadgets enhanced by the capability to provide directions and location-based services. Hewlett-Packard recently began selling its first palmtop with an integrated GPS receiver, maps, and navigation software.

The iPAQ rx5900 is billed as a "travel companion" and merges traditional calendar, e-mail, and Internet functions with car and handheld navigation. The $600 device runs both the Microsoft Windows Mobile 5.0 for Pocket PC operating system and navigation software from TomTom.

Some new devices add a twist on the traditional navigation scheme. Wrapped in a white and silver design much like an iPod, the Mio DigiWalker H610 offers GPS navigation primarily geared for walkers, though it also works in the car. At about 2 in. by 3 in. and less than 1 in. deep, it's one of the smallest GPS units on the market. The $449 unit also features games and multimedia capabilities.

Stalwarts in the personal-navigation market are busily trying to prepare products and services to combat new competition like GPS-enabled palmtops, multimedia players, and even cell phones. TomTom's new top-of-the-line GO 910 navigation unit, for instance, packs in a hard drive á la iPod to serve up photos and music alongside driving directions. But its awkward, bulky egg shape — a design concession to accommodate a large screen, hard drive, and built-in speaker — perfectly underscores the difficulty manufacturers face in turning navigation tools into feature-rich, portable, multimedia devices. Mashing together capabilities can result in higher cost and reduced usability rather than must-have, all-in-one gadgets.

With each new take, the array of gadgets receiving signals sent by satellites in orbit is growing. The only question now: Will consumers tune into the new devices too?