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European Navigation Market Trends: Devices are Commodities, Content is the King Navigation & Location Europe 2008 June 4, 2008 Amsterdam Presented by Michael Minich Agenda Highlights of the European Navigation Market – 2007 & 2008 so far Navigation Market Trends Assessment of the European Navigation Market Presentation LBS – The Future of the Market Global Snapshot – NA Market Analysis Voice of the Customer Study – Navigation & Related Consumer Expectations Conclusions PNDs Still Dominate the Global Navigation Market – But New Business Models Could Shift the Balance Towards the Mobile Phone Segment EC grants approval for TomTom take over of Teleatlas. Nokia takeover of NAVTEQ still under the EC Scanner. Vertical consolidation of the mapping market is expected to introduce new business models skewed towards more content based services New Business Models Rising up for Navigation – Jentro Technologies introduced Advertisement funded free navigation in Germany. LBS focused market proposition is expected to make navigation and other services not focused on devices, but more focused on people Garmin Global Market Leader for PNDs with close to 10M sales. Partnering with Panasonic Automotive worldwide to deliver custom OEM navigation solutions to various vehicle manufacturers BMW offering internet connectivity through dedicated SIM card using EDGE technology (through NGTP Platform) T Systems to launch aftermarket internet connectivity box offering internet access through multiple UMTS connections Retains leadership position in Europe in 2007 with 50% market share. Expanded portfolio to include value added services like Mapshare (1 million customers), TomTom HD Traffic (with Vodafone in Netherlands and soon coming to Germany and France) European Navigation Market Size Analysis – In terms of Volumes, PNDs are Expected to remain Dominant, but Mobile Phone Segment is Expected to Rise Up and Compete 50.0 Million European Navigation Market Forecasts 40,000,000 35,000,000 30,000,000 93.0% 25,000,000 20,000,000 15,000,000 20.3 Million 10,000,000 5,000,000 90.0% 0 2008 2010 2012 PND Embedded Mobile Phone Based 7.0% 10.0% 2007 2012 Aftermarket OE Market US PND Market Exploded in 2007 to now take a Dominant Spot in the Global PND Arena PND Market Volumes At 2007 At 2007 1 1 2 2 15M 21M 17M 3 3 9.5M 4 2007 2008 2007 2008 Explosive growth in US PND Stable growth in Global PND Garmin Total TomTom Total Market compared to 2006. EMEA in terms of Market Size PND Sales at PND Sales at unit volumes 2007 2007 35.1M 9.8 M 9.6M EMEA PND Market - US PND Market – Growth APAC PND Market Growth over 2006 over 2006 – Growth Over 2006 72% 280% 139% Mobile Phone Based Navigation – By 2015 Nokia will emerge as the biggest global supplier of Navigation devices giving Stiff Competition for Traditional PND Manufacturers 2013 – Handset and Smartphone Navigation Scenario Factor – Applicable to only Type of Mobile Phone Western Europe Smartphone/PDA Regular Handset Sales at 2013 ~ 40 Million ~ 170 Million GPS Enabled 65% 35% Off Board Navigation 35% 25% Enabled LBS Market with Mobile Phone as the Device – Multiple Service Pricing Packages like Pay Per Use and Subscriptions Based Models eCall Pedestrian - Aftermarket Navigation Solution Parking Completely Information Off board & Navigation Reservation Variable message signs Real Time 3G, GPRS. HSDPA, UMTS, WiFi Social Dynamic Networking Traffic Tools Information Audio Mobile TV & Video - DVB H Downloading Telematics Platform: OE Market Aggressively venturing into standard platforms to push telematics services into mass market status, host of new efforts namely NGTP and TEMA.MOBILITY • Platform based on a • Flexible, scalable and • Second generation telematics black box (T- technology neutral platform Blue&Me Nav introduced box) with SIM and UMTS to deliver telematics services on Bravo and 500 technology • Platform open to multiple • Fiat group sold more than • Basic concept is to connect technologies namely UMTS, 250,000 vehicles with first the vehicle to a mobile WiFi, VoIP, etc generation Blue&Me on network and enabling mobile Grande Punto • Focus is on providing over broadband services the air telematics services • Diagnostics is the next • The technology platform to in-vehicle devices feature expected to be behind TEMA.MOBILITY is included in this platform • Telematics service providers open to different service can now sell same service to • Microsoft clearly moving providers to add on services multiple vehicle ahead in auto space as key • Platform ensures cost manufacturers over NGTP supplier effectiveness for TSPs neutral platform • Fiat & PSA are the only • Platform offered to other OEMs to focus on telematics manufacturers on creative on such a grand scale commons license basis Biggest Challenge for LBS Services is to Convince Consumers onto Subscription Based Services 10 Convince European consumers into Rating adopting subscription Establish 5 based services effective cross considering past industry Develop a killer failures and business models service package dislike of EU and ensure and help Moving services Battling over consumers smooth consumers like social multiple towards cooperation prioritize over networking to technology subscription different services mass market platforms and based models vendors 0 Source: Frost & Sullivan Market Challenges Off Board Navigation, Traffic Information and Pedestrian Navigation will be Killer Components by 2012 in the LBS Offer High Current Penetration Real Time Traffic Information Medium Infotainment Off Board & Convenience RVD Data Navigation Exchange Pedestrian And Fixing Navigation Local Search Others – Social Networking, PAYD Flexible eCall, bCall. Productivity Parking Insurance SVT - email, etc Low Low Medium High Growth Source: Frost & Sullivan NA Market Analysis: Once Considered a Small Segment for the PND Market Now Has Risen up To Occupy more than 1/3rd of the Global Volumes NA PND Market Analysis 30 4000 3500 25 3000 20 2500 In $ Million In Millions 15 2000 1500 10 1000 5 500 0 0 2007 2008 2010 2012 Unit Shipments Revenues 58% of non-navigation users are interested in purchasing Navigation Systems in the future Q7 How interested are you in purchasing a navigation system in the future? Neither/ Nor/ Don't know 17.5% Interested 36.4% Interested 58.3% Not Interested 11.7% Very Interested 21.9% Not Interested at all 12.5% Base Non-users n=1,695 Consumers want portable systems that can link to in-car systems – Dockable PND is a more like the preferred option, TomTom already delivered such a system on Toyota Yaris in Europe Q46 Please rate your agreement with the following general statements…. I would prefer a portable navigation device that links to the in-car system so I can more easily visualize and operate the system while 11% 28% 62% driving Navigation devices should be portable because I want to be able to 14% 27% 59% use them outside the car I prefer a device that only provides satellite navigation, because will 15% 38% 48% give greater level of accuracy and more in-depth features I don’t mind having to use my CD slot if I am using my navigation 28% 28% 44% system, as long as I can listen to the radio I want my navigation system to provide in-depth information on places of interest (for example I want it to tell me fuel prices or give 24% 35% 42% me details of hotels and facilities available) not just how to get from A to B I would accept a navigation system with less accuracy and features 56% 25% 20% if was integrated into my mobile phone Navigation systems are related to driving and should be fixed to the 30% 54% 16% car Disagree Neither/Nor/ Don't know Agree Base: Users n=1,974 Price Willingness to Pay – Consumer willingness to pay for PND closer to market price, but huge gap in consumer willingness and actual market price for embedded Systems Lack of perceived value addition and mass market consumers price to value ratio not working out is the major reason for lower willingness to pay for fixed systems GPS Turn-by-Turn System - The turn-by-turn type € 700 € 644 systems are basic systems equipped with… € 600 € 600 € 500 € 500 € 400 € 400 Colour display with medium resolution - Is a clear € 284 € 300 screen but does not have as many pixels or dots € 300 per inch as brighter… Map image. Simply provides your route as if on a € 200 € 200 real map… € 100 € 100 €0 €0 Prefer Fixed Prefer Portable Front panel user-interface - Scrolls, buttons, keyboard, etc… A&B C D&E SUV MPV 589.442 631.892 660.442 729.117 635.563 Base prefer fixed n=570, prefer portable n=1,410 Almost 80% of Consumers are Interested in Real Time Traffic Information as a Real Time Update Option Q69 How interested would you be with a service that would provide you with information on demand (rather like ring tones or wall paper for your mobile phone)? Please rate how likely you would pay extra for updates on the following: Real time traffic information 7% 15% 78% Map details or coverage extension, for when I go abroad (as I don’t 18% 24% 58% really need it at all time) Weather forecast information 19% 26% 55% Café’s and restaurants on route, particularly for holiday driving 23% 29% 48% Very specific update on restaurants and ratings in a specific area when I need it 30% 34% 37% New Wi-fi spot locations, or for particular countries, counties or 34% 34% 33% regions Very specific points of interest such as golf course or camping sites for when I am on holiday 36% 32% 32% Not Interested Neither/Nor/ Don't know Interested Base: n=1,974 Map and LBS Updates – Majority Consumers want to update maps and points of interest on a monthly basis, this clearly gives a conclusion that some form of connectivity (to internet) should be there on Navigation devices Q63 How frequently would you expect Q64 How frequently would you expect to to update your maps? update your points of interest? Rarely/ Real-time Rarely/ Never, automatica Never, Real-time 2.8% lly; 39,8% 0.6% automatica lly; 32,9% Daily; 5,1% Daily; 4,6% Weekly; 13,9% Weekly; 12,2% Yearly; Yearly; 16,9% 19,7% Monthly; Monthly; 26,0% 25,5% Base n=1,974 Map Update Options – 31% of consumers seem to be in favor of the real time dynamic wireless map updating method, a technique that was exhibited by Aisin AW during the recent Frankfurt Show – “Map on Demand” Q62 What do you feel would be the most appropriate form of updating the map and points of interest information used by the navigation system? (Select only one) On request update Take the car or system Yearly update via CD wireless (over GSM) 10% to the dealer/shop /memory card 3% 12% Service Centre 2% Real time Internet/PC update to the 42% system 31% Base n=1,974 Conclusions – Future of Navigation and LBS Market will Not Focus only on the Car Domain Device side of navigation business in Europe is commoditized. Leading companies are focusing more on services (e.g. TomTom HD Traffic) Emerging markets like Korea, China US Now a Dominant and India more Market for PNDs in focussed on the Global Arena Personal Navigation Devices Conclusions LBS market opening up – Future is with innovative models Mobile phone like AD Based based connected rising up navigation Thank you very much for your attention! Michael Minich Cyril Cromier Consulting Analyst European Sales Director Automotive & Transportation Direct : +33 (0)1 42 81 22 44 +49 (0)69 770 33 22 Mobile : +33(0)6 09 90 88 42 email@example.com Email : firstname.lastname@example.org
"European Navigation Market Trends Devices are Commodities "