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European Navigation Market Trends Devices are Commodities


									European Navigation Market Trends: Devices are Commodities,
                    Content is the King

             Navigation & Location Europe 2008

                         June 4, 2008

                          Presented by
                          Michael Minich

                                            Highlights of the European Navigation Market –
                                            2007 & 2008 so far
  Navigation Market Trends

                                            Assessment of the European Navigation Market

                                            LBS – The Future of the Market

                                            Global Snapshot – NA Market Analysis

                                            Voice of the Customer Study – Navigation &
                                            Related Consumer Expectations

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




20.3 Million   10,000,000
                              2008                 2010               2012
                                PND     Embedded    Mobile Phone Based           7.0%
   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


                                                                    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%
LBS Market with Mobile Phone as the Device – Multiple Service Pricing
Packages like Pay Per Use and Subscriptions Based Models

                      - Aftermarket

         Off board
                                                                      Variable message signs

         Real Time
                         3G, GPRS. HSDPA, UMTS, WiFi      Social
                       Mobile TV
                                            & Video
                        - DVB H
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
                                • 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


             consumers into

              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
                  towards          cooperation       prioritize over    networking to
               subscription                        different services    mass market
                                                                                          platforms and
              based models                                                                   vendors

                                                                                          Source: Frost & Sullivan
                                             Market Challenges
         Off Board Navigation, Traffic Information and Pedestrian Navigation will
         be Killer Components by 2012 in the LBS Offer
Current Penetration

                                                                                                           Real Time Traffic

                                          Infotainment                                        Off Board
                                         & Convenience          RVD Data                      Navigation
                                                                Exchange         Pedestrian
                                                                And Fixing       Navigation

                                                Local Search
                                                               Others – Social
                                                                Networking,             PAYD Flexible
                                                                                                           eCall, bCall.
                                Productivity                      Parking                Insurance
                                 - email, etc

                               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


                                                                                In $ Million
          In Millions

                        15                                               2000


                        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

   Not Interested

       Not Interested at all

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%

 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%

                                                                                 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

                                        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%

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?

   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;

                                        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

                  Real time                                                              Internet/PC
                update to the                                                                42%

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

                  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 :

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