Mobile users pay an up-front cost to operators to get access to a vast array of applications. Apps are consequently very cheap or free. Reliability, start speed or quality of the app are not therefore a strongly perceived need from the smartphone user's point of view. The apps are secondary. They are used infrequently, typically fulfilling a very specific need at a specific time.
A study by Flurry reveals the monthly usage of downloaded apps on the main Smartphone platforms:
• iPhone: entertainment, 3 times per month; games, 5 times p/m; lifestyle, 3 times p/m; news, 8 times p/m; social networking, 18.5 times p/m
• Android: entertainment, 7.5 times p/m; games, 5.5 times p/m; lifestyle, 4 times p/m; news, 10.5 times p/m; social networking, 20.5 times p/m
The study not surprisingly also demonstrates that after a month the usage frequency dives down. This of course will not be true of all apps. Email clients, maps, browsers and such will be used constantly throughout the phone's life.
This pattern is reversed in the case of the driver.
A driver subscribing to a navigation service such as speed camera alerts or live traffic will look for the option that is the most reliable, instant and easiest to use. When behind the wheel, “availability” will become utterly paramount (think of the Coyote V2 radar alert device… always on and snug under the sunshield).
For drivers, the price paid by the user for the service is comparatively less of a priority than the expected quality. Of course subscription volumes for such services will never compare with volumes from mobile phones but the subscription price is substantially higher. To give a quick illustration, Coyote has sold way above 25,000 V2 models in France for €200 each with a monthly subscription of €12 a month for a one-year minimum contract.
Application developers could port their app to a number of connected PNDs and sell their services directly to the users — it is clear that there is an untapped opportunity there. A partially subsidized PND would leave some potential budget for the driver to spend on quality services.
But what this clearly shows is that in the context of in-car applications, service quality becomes a key strategic differentiator.
ABI Research believes that “PND survival is incumbent on its ability to become a viable component of the open mobile environment, a mutation that will require, among other things, speed. Generally speaking, the whole mobile industry is quickly moving to converged, open platforms which leverage third party applications as a means to capture consumer mind share.”
I agree with ABI Research analyst Dominique Bonte, the future of the connected PND will not stop once a base layer of apps has been developed and the subscriptions start growing. In mobile phones, once used solely for one application, the minute the OS allowed for the device to be used otherwise, an array of services appeared.
Dominique indicated last month that approximately 42.3 million PNDs would be shipped in 2010.
Once a device is in the car with a valid set of applications that pushes its sales and opens up opportunities for further revenues from third party developers, there won’t be any reason for more services to become available.
It is also very conceivable that once the set of apps starts growing beyond the feeble basic layer that today’s connected PNDs offer, the need for better and faster connectivity will become a priority.
At that stage, operators will have a valid business case to subsidize the connected PND as they do with the Smartphone — especially if the apps are theirs too!