The introduction of portable navigation devices (PNDs) has breathed new life into the European aftermarket for telematics and infotainment systems and given a strong boost to its sales and revenues. Currently, PNDs constitute one of the fastest-growing product segments in the aftermarket and are attracting considerable attention for their versatility and cost effectiveness. PNDs cost as much as 50 percent less than embedded navigation systems, making them extremely attractive in the aftermarket.
New analysis from Frost & Sullivan, Strategic Analysis of New Entrants in the European Aftermarket for Portable Navigation Devices, reveals that the total number of systems sold in the aftermarket is estimated to grow from 10 million units in 2006 to 30 million units in 2012.
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While consumer electronic majors such as TomTom and Garmin have long dominated the PND space, several traditional automotive companies are now eyeing this area after realising the immense potential of dedicated PNDs. Companies such as Blaupunkt and Harman-Becker have recently entered the market in a bid to get their share of the revenue generation opportunities available.
"Traditional automotive companies have started bringing out their own PND products to challenge market leaders such as TomTom and Garmin," says Frost & Sullivan Research Analyst Shyamsundar Anandhan. "These companies are likely to leverage their extensive technical knowledge in the automotive industry as well as brand image to promote their PNDs in the aftermarket."
In keeping with the features included in current market-leading products, new market entrants are also focusing on providing features such as dynamic re-routing and integrated traffic message channel (TMC). Many new participants also believe that integrating features such as MP3 playback or JPEG viewers into PND systems will help attract younger end users. However, market leaders are unconvinced about including multiple entertainment features as they are not a critical end-user requirement.
Consumer demand is geared toward core navigation features such as dynamic re-routing, speed of route calculation and Bluetooth-based off-board features, rather than non-functional features such as MP3 playback or JPEG viewers, as navigation is clearly the main reason for purchasing PND systems. As a result, companies that are able to offer products with such features are likely to meet with greater success in the aftermarket.
The biggest challenge facing new market entrants is the need to differentiate their products from those of competitors in terms of offering distinctive products at competitive rates. Incorporating features that enable traffic information and mobile-based telephony are likely to help them achieve strong differentiation in a market flooded with similar products.
While Bluetooth interface provides the key link between the mobile phone and PND to enable hands-free calling, making off-board navigation a reality poses another major challenge to PND manufacturers in terms of effective pricing and building mutually beneficial partnerships with network operators and off-board content providers.
"PND suppliers could release trial packages in the market with different pricing schemes to gauge the response of the public," suggests Anandhan. "This will also enable them to arrive at the right costing strategy with other partners such as mobile network operators and content providers."
Strategic Analysis of New Entrants in the European Aftermarket for Portable Navigation Devices is part of the Automotive & Transportation subscription and provides an in depth analysis of these participants and their impact on the more established companies in this market. It also examines the competitive structure of the aftermarket and key competitive forces, as well as offering a comparative analysis of all significant new PND brands. Interviews with the press are available.
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics.
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