With the rise of smartphones equipped with GPS, this might not come as much of a surprise to some, but the market for personal navigation devices is down and may never rise again. The latest evidence: TomTom’s recent profit warning in response to declining demand in North America for such devices, which stated, “we now expect this market to be down by about 30% for the year as a whole.”
The decline in Europe is predicted to not be so severe, around 10% according to TomTom. But the staggering decline in PND sales in North America could be an ominous sign for the market as a whole.
According to Patrick Connolly, senior analyst at ABI Research, “TomTom’s US loss may be Garmin’s gain, having had a relatively strong 1Q11 in this region. However, If the market as a whole is feeling this pain, then our forecast of a rapidly declining US market is looking increasingly likely. 2Q is viewed as a strong indicator for overall performance for the year in the US.”
GPS Business News believes that everything lies in Garmin’s next profit statement. If TomTom’s biggest competitor also comes in with numbers that are alarmingly low, the movement of this market to a “niche business” probably isn’t far off.
As for connected devices that provide real-time information on traffic, weather and gas prices, among other things, the future is murky. But TomTom’s the only company selling many such devices, and even then they’re having a hard time getting people to subscribe for connectivity after the free trial period runs out. For example, 30% of the devices TomTom recently sold in Europe have connectivity, but GPS Business News reports, “According to well informed sources, renewal rates of subscription for TomTom Live services on PNDs would be around 15 percent, therefore not such a great success for the Dutch PND maker.”