Thursday, October 29, 2009

On Google's move in navigation

It's been announced a couple of days ago that turn-by-turn GPS navigation would be supported soon on devices based on Android 2.0 platform. Free of charge. The new Google Maps Navigation offers free turn-by-turn navigation garnished with Google's core business (search by voice and in plain English, search along route) and existing services (traffic, satellite and street views) for Android devices.

I was shocked to hear this news. The two biggest map data providers, Tele Atlas and Navteq, have been acquired a few years ago, former for $2.9bn by TomTom latter for $8.1bn by Nokia. Their main revenue sources were licensed map data and value added services e.g. turn-by-turn navigation. Since Google uses either its own map data or one that is freely available, I think I told everything: they do whatever they want. It is still unknown how Google will monetize on the new service - other than ruining competitors -, but advertisement seems to be a very likely option.

On a related note, I found Bill Gurley's article on Less than free business model quite interesting. Briefly, Google offers Android to OEMs free of royalty, even more, they pay ad split to them. In other words, it's not only that OEMs don't have to pay, but on the contrary, they will get paid. One of the commenters of this article gave a hint on another business model that Google may try to follow: don't bother with ads, but offer a package to navigation device makers, news agencies, automakers, roadside advertisers, etc. A package that is based on continuously updated traffic data that can be used to provide always optimal routing information.

How can competitors react on Google's move? Without own map data it's very difficult to compete with someone who's giving away the same service that we are selling.
  • Stefan from IntoMobile suggested that Nokia should make map data free and wait for the flood of new mapping services - let's see what innovation will result in. Not a bad idea, but would leave Nokia in a bit of passive role, wouldn't it?
  • The other option could be to do the same as Google may do in the future: sell a package instead of showing ads (see above). Why Nokia? Because it has maps data. Which platform? It's rather Maemo than Symbian - we're talking not only about mobile phones, but other embedded devices, too.
  • Finally, the third option is advertising and provide free service. Who? Microsoft doesn't have own map data, but has Bing and Yahoo! search, which is a good basis for advertising. Whereas Nokia doesn't have search, but has maps data (I told you that Nokia should have bought Yahoo!). Perhaps these companies should form an alliance?

Looking forward to your comments,



Daniel A. Nagy said...

Well, Nokia maps has still some advantages over Google's, so they may want to pick up the glove.

For example, Nokia's maps are FAR better optimized to lower bitrates and flakier connectivity, which, let's face it, will remain an issue with mobile internet access, especially if everyone and their aunt will use it to download navigation data from cellular networks.

Gábor Török said...


Thanks for sharing your thoughts.

On a related note, I've just read an article (don't know where) that discussed why BlackBerry might be more popular in the future: the reason why network operators still set so high prices for - unlimited - internet connection is that they don't have the capacity to serve the request of the flood of users. And in fact, BlackBerry's efficient compression techniques just help them to survive the period until they can expand their infrastructure.

gaf said...

And the quality of Google Maps are too low for navigation, at least in Hungary. But I bet, they will fix all issues, before they make it available for the public.

Andrés said...

Interesting blog...
BTW, I noticed that all of the links in your blogroll pointing to* are broken. (Sorry to post here, I couldn't find a contact form...)

Gábor Török said...

Thanks, Andrés! Broken items got removed from the blogroll.