Weakening demand: where?
First, it seems that the weakening U.S. economy has not impacted yet the PND sales, at least for the first two months of the year. NPD group statistics show a year on year market growth of 225 % in January and 280% in February. Additionally, yesterday’s financial results from Circuit City, one of the leading retailers of consumer electronics products in the United States, shows that “comparable store sales of navigation products increased by strong double digits” in the fourth quarter ending February 28th. In Europe, even the most mature markets such as Germany and the United Kingdom have continued to show 40% growth in the first quarter - according to TomTom – which is a good sign that the saturation point has not yet been reached, leaving room for growth especially in less penetrated market, Southern and Central-Eastern Europe.
Mobile phone threat?
Third, the threat of mobile phones to the PND market is overblown by some analysts and mainstream media. It makes good headlines but does give a poor understanding of the market dynamics and consumer’s choice. As ABI Research analyst Dominique Bonte said to GPS Business News in a recent interview, “the success of the PND market is due to its simplicity”: buy it, put it in your car and don’t bother to read the user manual! The mobile phone navigation market has not reached this level of easiness both in the sale process and usability. In many cases there is a monthly subscription, the fear to spend too much in data connection, the complex software installation, the lack of touch screen or full keyboard, the screen size, etc.