Navigation on PSP: good idea, wrong price



Navigation on PSP: good idea, wrong price
Sony Computer Entertainment Europe unveiled this week its pricing for Go!Explore, its GPS navigation accessory for the PSP, to be released this spring. The software has been developed by Nav N Go, SiRF is said to power the GPS module and Tele Atlas is the provider of the rich 3D maps. But what was initially a good idea is doomed by its price: €119 for the receiver, the software and the map of one country (on a UMD disc) or €149 to add an in-car kit (the PSP slim currently retails for €169).

Already today, almost everywhere in Europe, one can find good Personal Navigation Devices between €99 and €149. The latest example is the Takara GP26 just launched in France at €99 with a 3.5 inches touch screen, French Navteq map data and Destinator software.

Sony is definitely willing to make very fat margin on this accessory. If we consider the add-on GPS, the software, the map and the car kit, its bill of material is probably under €30. With a pretty similar bill of material, Garmin has just announced a GPS solution for laptops that will retail at $99 with full U.S. maps.

Navigation on PSP: good idea, wrong price
Navigation on PSP: good idea, wrong price
Again, Sony is showing very few understanding of the navigation market dynamics – the sluggish sales of its own PND range is a previous well known example. Here Sony’s mistake is to think PSP accessories are all made equal, that they can charge high premium for them because they are unique. But in the case of navigation there are many other alternatives (PND and mobile phones) that bring an equal or superior value.

With an aggressive price point at €79 or €89 Sony would have offered a good value proposition to its millions of European PSP customers and could sell good volumes while still maintaining correct margins. Sony could also leverage the WiFi connection of its device to add to the bill some high margin premium contents and services (speed cameras, gas prices, rich POIs, nearest PSP game retailers, etc); as PND manufacturers are starting to do today.

Mr. Sony please don’t believe your customers are blind people; they are savvy kids or grown up persons. If they want navigation they will buy it at the best price, not yours.

Thursday, January 10th 2008


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