The iPhone's new navigation weapons

Stephen H. Wildstrom, BusinessWeek
22 Jun 2009

Add another to the list of markets likely to be upended by Apple\'s iPhone. Buoyed by both improved hardware and more capable software for both new and existing phones, Apple is fearlessly extending its reach into new areas, incumbents be damned. One market where the incursion is likely to be felt most keenly is the fast-growing field of real-time navigation.

The iPhone 3G, released a year ago, included a GPS receiver for location information and a very good version of Google maps. But in the software development kit for that device, Apple specifically barred the creation of real-time, turn-by-turn navigation systems. With the June 17 introduction of the new 3.0 version of the iPhone software, that restriction has been lifted for the 3G and the new 3G S.

Two navigation companies, TomTom and Networks In Motion, have jumped into the fray with very different products and business models, but both are extremely disruptive to the existing order. By offering a nav package for the iPhone, Amsterdam-based TomTom, a leading maker of standalone personal navigation devices, seems to be following advice by former Intel CEO Andrew Grove, who said a company should never worry about cannibalizing its own products, because if it doesn\'t, someone else will. PNDs, caught in a squeeze between built-in auto nav systems and phone-based navigation, already face commoditization and quickly falling prices.

With a touchscreen display as big as those on some PNDs and a terrific software platform, the iPhone should make a dandy navigation device. TomTom makes it better by offering an optional car kit, which makes it possible to mount the iPhone to the windshield for easy viewing and operation. The kit actually contains its own GPS receiver for improved timeliness of driving instructions; the iPhone\'s built-in GPS is excellent for most location-based applications, but its accuracy leaves something to be desired for real-time navigation.

Blackberry competition

TomTom has not yet said what either the iPhone app or the car kit will cost, but the app will be a one-time purchase. The closest thing on the market today is TeleNav\'s $99 application for Research In Motion\'s BlackBerry.

Tom Murray, TomTom\'s marketing vice-president, says he\'s not too concerned about cannibalization. He believes the traditional PND will survive the iPhone assault because a dedicated device can still offer far more features than a phone. \'The iPhone will offer good performance, but it\'s not a dedicated PND,\' he says. \'There are parallels between this business and cameras"”you use your phone to take pictures, but you still want a dedicated camera. The devices have complementary potential.\' My experience with other phone-based navigation services is that they have been perfectly adequate for casual use but no match for a good PND. But the iPhone is so different from other handsets, and offers so much richer an application platform, that TomTom on the iPhone could be a much greater threat to PNDs than any previous offering.

The disruptive potential of Networks in Motion\'s Gokivo is even greater. Nearly all smartphones and many phones with less sophisticated features now offer subscription navigation services. These include NIM\'s VZ Navigator, through Verizon Wireless. The typical monthly charge is $10, of which $3.50 or so goes to the carrier and the rest to the nav service provider.

Gokivo on the iPhone blows up this model. It\'s the first subscription service to take advantage of the iTunes App Store\'s new capability for in-application sales; initial purchase of the program is just 99¢, but the service will cost $10 a month.

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