What is a GPS?
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.
Who are the 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
What are the Leading 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 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 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).
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 doesnt offer real-time traffic information like Google Maps and Waze. It is less versatile and more suited for the frequent
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.
Who is Leading in the GPS Device Market?
At the close of the 1st quarter, Garmin closed at a total company revenue of $624 million, a 7% increase from the prior year (Business Wire:Garmin).
The auto segment had a decline of 11%, respectively (Garmin). This decline in the automotive segment can be attributed to the decrease in market interest
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 device competitors, their revenue from these devices is declining considerably. According to Garmin’s Q1 Report, gross and operating margins in the
quarter were 44% and 9%, respectively; slight adjustments from the prior year. While PND and automotive devices continue to decline, outdoor, fitness,
aviation and marine continue to grow reaching a 17% increase compared to Q1 ’15 and accounting for 69% of total revenue. Specifically, Garmin’s Fitbit in the
fitness segment contributes to this increase. For this segment, gross margin increased 51% in the quarter, while operating margin was 12% respectively
TomTom closed Q1 with 217 million euros, a 6% increase from the previous year in the same quarter. 29.7 million euros accounted for in the automotive
segment with a 26% increase compared with Q1 one year before at 23.6 million euros (TomTom). This can be attributed to TomToms partnership with Fiat Chrysler
and Toyota to provide navigation services in new models (Business Wire:TomTom). Consumer products ended the Q1 at 116.6 million euros with a 4% decrease in Q1 one
year before (TomTom). In Europe, there was an 13% decline in market size in the PND market, with a 1% increase in market share from 51% in Q1 ’15 to 52% Q1
‘16 in market share. In North America there was a decline of 22% in market size with a 1% increase in market share from 16% in Q1 ’15 to 17% in Q1 ’16
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 smartphones
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.
“The Business Wire: Garmin” http://www.businesswire.com/news/home/20160427005331/en/Garmin-Reports-Strong-Quarter-2016-Sales
“The Business Wire: TomTom” http://www.businesswire.com/news/home/20160418006502/en/TomTom-Reports-Quarter-2016-Results