DeLorme Ships new Outdoor GPS; Misses Mass Market Appeal

DeLorme Ships new Outdoor GPS; Misses Mass Market Appeal
Yesterday, DeLorme announced the shipment of its new handheld outdoor GPS, the EarthMate PN-40 ($399.95) in the United States. The PN-40 is a waterproof, ruggerized device powered by STMicroelectronics Cartesio GPS chipset and a dual-core processor. Features include a 3-axis electronic compass and a barometric altimeter. The overall design is completely similar to the EarthMate PN-20 which was introduced one year ago at $370.

All you can eat subscription for additional maps

The PN-40 comes with Topo USA 7.0 software built on 1:100,000 U.S. Geological Survey (USGS) data, displaying current terrain and land cover detail plus updated DeLorme street and road data. But the most interesting feature is that for a low $29.95 annual subscription users can download an unlimited amount of supplemental data including high-resolution aerial imagery, NOAA nautical charts, and USGS 1:24000 scale topographic maps.

Crossing the chiasm to mass market adoption

Despite this large content offer, this new product sounds a bit expensive compared to the Magellan Triton product range which starts at $129 (with no map included). Additionally, DeLorme’s user interface is now looking a bit outdated compared to Magellan and Garmin which have restricted the number of hardware buttons, developed icon-based menus and introduced touch screen on high end products.

These new features have woke up a sleepy GPS outdoor market which shown some solid growth in 2008; Garmin posted a 35% revenue growth in its fitness/outdoor category in the third quarter. The average outdoor GPS customer is currently transforming from a niche of early adopters - who were keen to fiddle with tons of buttons - to casual outdoor enthusiasts who are looking for easy to use products for hiking or geocaching. To satisfy this mass market, DeLorme will have to rethink its product’s usability and its pricing. Indeed, trying to make larger margin on hardware and smaller margin on content, than the rest of the industry, is probably not the best way to go. In the mid- to long term, hardware margin are likely to decrease in this market segment due to competitive pressure.

On a marketplace dominated by one player, Garmin, challengers such as DeLorme shall find a sustainable business model to maintain their profitability in the long run.

Thursday, November 20th 2008

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