Trend

GPS on a growth path

The GPS market in India is set to increase manifold, with companies looking to provide simple, low cost and reliable solutions, says Nivedan Prakash

Global Positioning System (GPS) provides unequaled accuracy and flexibility of positioning for navigation, surveying and geographic information system (GIS) data capture. Its growing use in automotive and consumer applications is propelling the market for mobile location technologies. Although standalone products are quite popular, the most common applications are built around Portable Navigation Devices (PNDs), mobile phones, or car navigation systems. Moreover, the technology is fast gaining acceptance worldwide, as it is penetrating into previously untapped areas.

GPS companies, both local and international, are competing to grab a piece of this market, especially in logistics for tracking cargo and trucks across India. Lately, the GPS market has started picking up in the country and competition between GPS device providers such as Garmin and inbuilt GPS provider in phone like Nokia has begun. Along with this, we already have maps and static navigation systems available for free or at cheap rates.

Globally, the GPS market is expected to exceed $30 billion in this financial year, as the market is being flooded by a number of affordable GPS components and receivers. As far as the Indian market is concerned, a relatively large number of players have entered the navigation market, which in turn depicts that the potential for development in the market is significant and that the industry will surge in years to come.

Giving details of the current status and size of the GPS market in India, Amit Prasad, MD and Founder CEO, SatNav Technologies, said, “GPS can be on phones, PDAs, PNDs or even as standalone devices. GPS devices sold for navigation only, last year, were about 16,000 in number. If you count all the phones which were sold with GPS inbuilt but without any application, then the number would be twice as much. But the users of GPS were only 16,000.”

Rohan Verma, Director, MapmyIndia, commented, “More than 2 million units of cars are sold per year in India, and there are more than 240 million mobile phone users in India. Of these total numbers, a non-trivial percentage of users can afford GPS products for in-car and mobile phone usage. The size of the market is, without doubt, truly large. The awareness and the understanding of the benefits of GPS, however, are just starting to pick up, so the spike in growth of adoption for these products lies ahead in the next few years.”

However, the penetration level of GPS market in India is still at 30%. Although there is a requirement and availability of hardware devices, service providers and matching applications are missing from the market.

“The penetration is still low and awareness is limited, but it is picking up fast. The opportunities are all in the mobile space, but automotive OEMs are slowly catching up to start offering dedicated devices,” added Prasad.

Meanwhile, in India, GPS is being used for vehicle tracking systems, personal tracking and navigation. The main requirement is from logistic companies, fleet owners, taxi services, sales companies for tracking sales people, and personal tracking for personal use. The enterprise is one area of opportunity, where the technology is driven by devices like the BlackBerry, enabling the industry players to reach high-end consumers.

Manmohan Kumar, Vice President-Marketing, BioEnable Technologies, said, “Everyday a new market is being created with the development of new applications in this segment. Recently we have given a GPS-based railway information system to Mumbai railways. State bus services are also planning to implement a GPS-based information system at every bus stop. The main market is that of logistics companies, fleet management companies, taxi services and call centers; and commercial success will depend upon offering better products and services to these sectors.”

Growth in India

A country’s policies and basic infrastructure play a crucial role in nurturing a new technology like GPS and its various dependent technologies such as GIS. Equal and fair competition between the local as well as international GPS vendors will enhance the growth of GPS market in India.

Telcos are fueling the growth of this market and with high-end phones now coming with this technology built-in, it is making a difference. The availability of WAP-enabled mobiles with GPS services lets individuals use tracking and navigation systems; earlier the technology was restricted to only commercial use.

Magnus Nilsson, CEO, Wayfinder Systems, pointed out, “I think there are several factors, the most important one being the introduction of handsets with built-in GPS. At the end of the day, device vendors want to sustain their margins by extending their offerings. We think navigation fits such a proposition.”

Crimes related to call center taxi services and requirement of managing a large number of cabs has also increased the demand for vehicle tracking systems. The success of navigation systems with US taxi services has forced Indian luxury taxi services to think about implementing the same kind of services here in India.

A M Lalljee, Director, Aerial Services, Distributor for Garmin in India, said, “Higher accuracy levels, value addition to the end product such as turn by turn navigation, novelty value and discovery of new uses have fueled growth.”

Meanwhile, the industry players believe that GPS is here to stay but to support its growth in India, the government needs to decrease restrictions on the availability of digital maps for commercial use.

“I think we will see an explosive growth of the market in coming years. While the GPS market is set to grow, value addition is what will make the difference to growth and the market,” commented Lalljee.

Kumar added, “Many companies are dedicating their development team for application development based on GPS, prices are coming down, services are getting better, better hardware is now available with a powerful GPS receiver. The future will see every vehicle being tracked through GPS-based services for better management, every vehicle having a navigation system for proper directions. The future will also see different new application based on GPS.”

Pricing factor

Today we can avail of maps and navigation systems either for free or at a cheap rate. The reason is that the market is maturing and it is moving from a niche to a mass-market. Even the availability of GPS and navigation with mobile communication devices has made it commonplace and that is why it is available with minimum charges from the service provider.

Kumar commented, “Prices decrease once a company recovers its development cost. The basic navigation system with proper detail map is now available at affordable prices because of increase in volumes and competition with mobile service providers.”

Prasad added, “Worldwide the prices have dropped significantly over the last three years, new technologies and volume growth have helped make this happen. It is rarely given free, just that the manufacturer might choose to bundle and absorb the cost in the end user price.”

On the other hand, Verma asserted that marketing gimmicks need to be separated from the reality, “Phones preloaded with ‘free’ maps and navigation still cost the consumer money. They are just packaged in a way to communicate in a different manner to consumers. All these marketing activities are necessary for initiating the market, and sometimes also needed to push out a product which one has less confidence in. MapmyIndia has always been clear about the quality of its products. Our Internet portal is free. But our in-car navigator and mobile phone software iNav come at a cost that merits the benefits and the quality of the product.”

The basic question that arises here is that will this price drop bring in more competition in the market. The answer is—as volumes in the market increase, costs will go down. Also, as the volume picks up, competition will enter.

Competition in the market will mostly result in value addition and enhancement. With the addition of numerous models in mobile phones, and the dropping of prices, competition has been limited to the big names and international players. There is also a brand loyalty among those who are comfortable with the operations of a product.

“Price drop and competition are two aspects that will keep happening. We believe that competition helps the market grow, but lower prices should not make everyone unprofitable as has happened in the airline industry. So a low cost structure, a robust pricing model and good quality is what will help the market,” said, Prasad.

Nilsson, however, said, “No, I don’t think it will bring about more competition. What we will see is rather more consolidation of players in the value chain.”

One thing is for sure and that is that this drop in prices would benefit many industry verticals like the logistics industry, as it will help it make tracking systems an integral part of the fleet. As costs become more affordable, it will lead to higher adoption and in turn will only add to overall revenues and profits. A price decrease will also help small logistic companies add a tracking system to vehicles.

Current and future trends

The industry is witnessing a trend of quick adoption due to lower priced GPS enabled handsets. However, mobile phones and PDAs have a limitation when it comes to battery life. If the mobile battery runs out, the users are helpless, unlike the case when carrying a separate GPS that offers maps, navigation, multilingual translation, currency conversion, etc. There seems to be a trend of carrying multiple devices.

Devinder Kishore, Director-Marketing, Nokia India, added, “The future of navigation devices is virtually unlimited. Recent advances highlight the huge potential that exists for future navigation and positioning applications. The mobile based navigation is taking shape and India is gearing up to adapt and adopt the new technologies. From Nokia’s stable we are looking at bringing rich location based experiences to more Nokia devices.”

Currently GPS use is restricted to logistics companies and fleet owners, and is considered as a solution for tracking. In the future, GPS will enter into public and personal transport, railways, shipping, and many other location based services will be available with GPS.

“In the future, every car will have a GPS device and every phone will offer navigation, that is the major trend we see coming up,” concluded Prasad.

nivedan.prakash@expressindia.com