Finally, as we were expecting to meet with Magellan at the IFA consumer electronics show in Berlin, their booth was cancelled, probably due to the fact the European marketing communications team seems to have completely disappeared.
Unfortunately, Magellan’s corporate public relations have not been willing to comment these news with us. So we will try to understand by ourselves what is going on in Santa Clara.
According to NPD Group data, Magellan’s market share on the Personal Navigation Device market in the United States was 45% in April 2005. Three years later, during the second quarter of 2008, Magellan’s share was only 13% (11% according to Canalys data). In addition to that Magellan has never been able to gain significant market share in Europe (under 2% in 2007) where a large part of the PND market was made in 2006 and still in 2007.
Because it was not making sense for the French Defense group Thales to run a consumer company, the group sold Magellan to Shah Capital Partners (SCP) in the summer of 2006 and got paid a hefty amount of US$170 million. The mission given to Nelson Shan, recruited by SCP from San Disc in December 2006, was to transform a sleepy B2B company into a consumer focused entity. This surely happened, but probably not fast enough for Magellan to gain decent brand recognition on the European market and resist the marketing campaigns of TomTom in North America to seize the number two spot.
Obviously Magellan’s business is not only in the PND market, but also in the outdoor handheld GPS segment and in some B2B GPS activities: GIS applications, GPS modules, etc… But in the outdoor market Garmin is a dominant player, leaving meager revenue to share between its competitors. The B2B GPS business, with higher margins, is interesting for Magellan; however there is nothing to compare with the size of the consumer navigation industry.
Will Magellan follow ViaMichelin, Cobra and Sony (in Europe) who have left the PND market? This is probably a bit early to tell. Magellan used to be a “brand” for navigation back in 2005 in the United States, particularly thanks to its Hertz NeverLost partnership. Today with their R&D and marketing dollars Garmin and TomTom have the upper hand while Mio and Navigon are not far away, just waiting to take over a third place on the market.