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Introduction

Global Positioning System or GPS is a network of satellites orbits the earth at fixed points
and sends back location information to anyone with a GPS receiver. The signals carry a time
code and geographical data location that allows the user to identify their location. It was
invented by Ivan Getting, a doctor of astrophysics. It was designed as an intelligence application
in the period of the Cold War in the 1960s. The Army, Navy, and Air Force each created their own
versions of GPS, and integrated these versions in 1973 and called it the Navstar GPS. Originally created
for military use, it was released for civilian use by President Ronald Reagan in the 1980s after a Korean
Airlines flight from Anchorage to Seoul strayed off course into USSER airspace resulting it being shot down
by a soviet fighter jet. All passengers and crew were killed.

TomTom is a dutch-based company founded in 1991 with the launch of their b2b mobile software applications and PDA’s for consumer use. By 1993, TomTom led the market with GPS navigation applications such as EnRoute and Citymaps. In 2002, TomTom launched their first GPS navigation device in Europe, but later expanded their market to the Northern America region. The demand for portable GPS devices increased and in 2004 TomTom later launched TomTomGo, a Portable Navigation Device (PND). In 2013, TomTom launched a GPS watch for athletes such as swimmers, runners, and cyclists by offering key performance statistics.
The award-winning Magellan (also known as MiTAC Digital Corporation, a subsidiary of MiTAC International) was founded in 1986 and also manufacturers various GPS products including car navigations and handheld units. MiTAC International Corporation (MIC) was founded in Taiwan in 1982. MIC produces GPS brands which include Magellan, Mio, and Navman. Among others, MiTAC also manufacturers computers as well.

Leading Manufacturers

The major manufacturers in the GPS market are Garmin and TomTom.

The Garmin Corporation was founded in 1990 and named after electrical engineers
named Gary Burrell and Dr. Min Kao. Both Burrell and Kao were former employees of
King Radio Corporation, a manufacturer of radios and navigation equipment for aircrafts.
In January 1991, Garmin launched its first product called the GPS 100AVD. It was a GPS
unit for boats and small aircrafts and costed about $1000 a unit. Within just two years
GPS units became a $100 million-a year market (Funding Universe). Garmin entered
automotive market during the late 1990s when they introduced GPS III in 1997 and
StreetPilot in 1998. Garmin continued to expand by venturing into the aviation, fitness,
and outdoors market.

TomTom is a dutch-based company founded in 1991 with the launch of their b2b mobile software applications and PDA’s for consumer use. By 1993, TomTom led the market with GPS navigation applications such as EnRoute and Citymaps. In 2002, TomTom launched their first GPS navigation device in Europe, but later expanded their market to the Northern America region. The demand for portable GPS devices increased and in 2004 TomTom later launched TomTomGo, a Portable Navigation Device (PND). In 2013, TomTom launched a GPS watch for athletes such as swimmers, runners, and cyclists by offering key performance statistics.

GPS Device Market

Garmin

At the close of the 3rd quarter this year, Garmin closed at a 4% decline in revenue at $680 million with $0.51 per share, a decrease of 33% from their 2014 3rd quarter reporting of $0.76 per share (GPS Business News). Garmin’s automobile segment which includes PND and automotive products, is down 14% at $265 million (GPS Business News). This decline in the automotive segment can be attributed to the decrease of the GPS unit and increase in software applications that can easily be downloaded on smartphones and tablet devices. Though Garmin continues to lead among other GPS competitors, their revenue from these devices is declining exponentially. According to GPS Business News, “Gross and operating margins in the quarter were 43% and 12%, respectively, declining from the prior year. The gross margin decline was driven by currency movements “(GPS Business News). While PND and automotive devices continue to decline, fitness products such a Garmin’s fitwatch which includes GPS capabilities, continues to increase at 23% at $143 million. For this segment, “Gross margin fell to 54% in the quarter, while operating margin declined to 19%. The gross margin decline was driven by both the unfavorable currency movements and a competitive pricing environment for certain product categories” (GPS Business News).

TomTom

TomTom closed the 3rd quarter with an 8% increase compared with 2014 at 254 million euros. Consumer products ended the 3rd quarter at 161 million with a 5% decrease compared with their 3rd quarter closing of 153 million euros in 2014. This growth was driven by PND, drive segments and sports revenue (Business Wire). In Europe, there was an 8% decline in the PND market and in North America there was a decline of 20%. TomTom closed the 3rd quarter of the automotive segment with 26%, no change from 2014s 3rd quarter report. Year-to-date they ended the 3rd quarter with a12% decrease in TomTom’s automotive segment compared to
2014

GPS Device Market

Garmin

At the close of the 3rd quarter this year, Garmin closed at a 4% decline in revenue at $680 million with $0.51 per share,
a decrease of 33% from their 2014 3rd quarter reporting of $0.76 per share (GPS Business News). Garmins automobile segment
which includes PND and automotive products, is down 14% at $265 million (GPS Business News). This decline in the automotive
segment can be attributed to the decrease of the GPS unit and increase in software applications that can easily be downloaded
on smartphones and tablet devices. Though Garmin continues to lead among other GPS competitors, their revenue from these devices
is declining exponentially. According to GPS Business News, Gross and operating margins in the quarter were 43% and 12%,
respectively, declining from the prior year. The gross margin decline was driven by currency movements(GPS Business News).
While PND and automotive devices continue to decline, fitness products such a Garmins fitwatch which includes GPS capabilities,
continues to increase at 23% at $143 million. For this segment, Gross margin fell to 54% in the quarter, while operating margin
declined to 19%. The gross margin decline was driven by both the unfavorable currency movements and a competitive pricing environment
for certain product categories (GPS Business News).

TomTom

TomTom closed the 3rd quarter with an 8% increase compared with 2014 at 254 million euros. Consumer products ended the 3rd quarter at 161 million with a 5% decrease compared with their 3rd quarter closing of 153 million euros in 2014. This growth was driven by PND, drive segments and sports revenue (Business Wire). In Europe, there was an 8% decline in the PND market and in North America there was a decline of 20%. TomTom closed the 3rd quarter of the automotive segment with 26%, no change from 2014s 3rd quarter report. Year-to-date they ended the 3rd quarter with a12% decrease in TomTom’s automotive segment compared to 2014.

GPS Software Applications

In a survey conducted by JD Power and Associates in 2012, 47% of participants indicated they utilize a downloaded navigation application in their vehicle, compared with 37% in 2011. Markedly, 46% of participants in the study indicated they would not repurchase a factory-installed navigation system if their smartphone navigation had similar capabilities that allow them to be displayed on a central screen in their vehicle (JD Power & Associates). The study indicated “navigation system satisfaction declined from 2011, as owners were frustrated by the complexity of menu systems, voice control commands and inputting destinations” (JD Power & Associates). It is also worth noting that participants indicated their desire to have voice capabilities that would minimize the need to type information into the navigation system. This is a demand that GPS manufacturers are failing to provide, thus increasing consumer preference for GPS software applications.
The leading GPS software applications are Google Maps, Apple Maps, Scout and Waze. All the leading software applications on the market are free.

Google Maps

Google Maps is the leading mobile navigation application powered by Google Inc. It is a GPS mobile application that was launched in September 2008 for Android systems and in December 2012 for iOS systems. This software application locates your position using wireless networks and sites. Features include continual directions to specified route, re-routing capabilities, detailed information about over 8 traffic monitor, search by voice, street view, and public transit information. For nearly three months, Google Maps was removed from the iPhone when Apple launched Apple Maps. The application is offered in more than 40 countries and 29 languages (The Wall Street Journal). However, it was met with much criticism as consumers complained of its inaccuracies. Google Maps has favorable reviews in comparison to its competitors such as Apple Maps. According to a review by CNET, “Google Maps sets the standard for what mobile navigation should be and more” (CNET). Though Apple Maps has a sleek look, Google Maps is more user friendly and greater fulfills the demands of GPS consumers today.

Apple Maps

Apple Maps is powered by Apple Inc. Its latest version offers turn-by-turn navigation, real-time traffic information, Siri voice recognition, fly over which allows you to view realistic 3D images of cities, public transit information, as well as information about nearby businesses. However, according to CNET, criticism of Apple Maps includes search terms providing inaccurate information, searched locations lacking details, and flyover images with blurry images (Parker).

Scout

This software application is powered by TeleNav. It acts more like a standalone GPS device by offering capabilities dedicated to navigation demands in a vehicle. It is a lot simpler than Google Maps and Apple Maps in that it offers you instruction from getting from one location to another or even re-routing options to get you to your location faster. The Scout Plus is an upgrade from the free version at $24.99 annually, it gives you offline access to maps of the U.S. and Alaska. This option is ideal for people who live in dead zones areas where network connection is in and out. The downside to this application is it doesn’t offer real-time traffic information like Google Maps and Waze. It is less versatile and more suited for the frequent driver.

Waze

This application is gaining a lot of traction because of its real time traffic information, speed camera indicator, and accident notifications. According to Cabebe, it is considered one of the top GPS software applications. In June 2013, Google acquired Waze however it is not an alternative to Google Maps. Waze is catered to the driver since it does not offer information about public transportation or walking directions. It also lacks in the interface segment in which buttons are small causing pop ups to appear accidentally. However, it is still a leading application in the software application market for navigation by offering consumers viable solutions to getting to their destination.

Conclusion

It is evident that the decrease of the GPS navigation unit is related to the increase of the various capabilities offered to consumers through GPS application software. As smartphone’s from different manufacturers continue to become more accessible and cheaper, consumers will continue to increase their usage of navigation software applications because they offer the viable options they are searching for. If Garmin, TomTom and Magellan create more GPS models similar to current software application, I predict their revenue will increase since consumers will have the same product and they will have the incentive of keeping their telephone network data costs down.

References

Cabebe, Jaymar “Waze: Review: Your Trusted Source for Traffic Data” cnet.com. 13 June 2013. Retrived 10 December 2015. < http://www.cnet.com/products/waze-social-gps-maps-traffic/>

Cunningham, Wayne “Scout by TeleNav Review: Scout Finds your Traffic Free Commute” 7 July 2014. Retrieved 12 December 2015. < http://www.cnet.com/products/scout-by-telenav/>

“Business Wire” businesswire.com. 20 October 2015. Retrieved 10 December 2015.

Efrati, Amir. “Google Releases Map App for iPhone” The Wall Street Journal. 13 December 2012. Retrieved 14 December 2015.

“Fool” Garmin Ltd Tumbles as Market for GPS Units decline. Retrieved 12 December 2015.

Funding Universe “Garmin Ltd History” fundinguniverse.com Retrieved 15 December 2015.
Gates, Sarah “Apple Maps Officially Debuts, Google Maps Dropped” huffingtonpost.com. 11 June 2012. Retrieved 15 December 2015.

JD Power & Associates “Vehicle Owners Ask for Smartphone Integration and Better Voice Controls, as Satisfaction with Factory-Installed Navigation Systems Declines” JPPower.com. 11 January 2013. Retrieved 15 December 2015.

Lendino, Jamie “The Best Free GPS Apps” pcmag.com. 2 September 2014. Retrieved 12 December 2015.
“Magellan” magellangps.com. Retrieved 15 December 2015
McClaughlin, Molly “Scout by TeleNav” pcworld.com. 22 August 2014. Retrieved 12 December 2015. < http://www.pcmag.com/article2/0,2817,2463778,00.asp>

Parker, Jason “Apple Maps Review” CNET.com. 2012 25 September. Retrieved 14 December 2015. < http://www.cnet.com/products/apple-maps/>
Parker, Jason “Google Maps for iOS Review: The King of Maps Keeps Getting Better” CNET.com. 2012 13 December. Retrieved on 13 December 2015. < http://www.cnet.com/products/google-maps-ios/>

Privat, Ludovic “Garmin Sales Decrease 4% in Q3 2013, EPS Down 33%” 29 October 2015. Retrieved 12 December 2015.

Rizzo, Tony “$2.6 Billion GPS Fitness Device Market Losing Market Share to Smart Mobile Devices and Wearable Technology Products” wearabletechworld.com. 3 February 2014. Retrieved 12 December 2015.

Sullivan, Mark “A Brief History of GPS” pcworld.com. 9 August 2012. Retrieved 2 December 2015.
USA Today “Google Maps App: Welcome Return of an Old Friend” 12 December 2012. Retrieved 15 December 2015.