In case you haven’t heard, Google today announced their new Navigation application for Android 2.0. It offers real time turn-by-turn GPS directions via Google Maps, but the extra bonus is that it also offers Street View. It’s interesting to see how Google spent their billions of R&D funds into Street View and now have it all in the palm of your hands. The amount of labor and capital invested in Street View is enormous and now having it display in real time as a GPS aid is simply amazing. And true to Google’s past product offerings, Google Navigation comes free to all Android 2.0 users.
Not surprisingly, Garmin and TomTom stocks were hit hard – down by about 20% for both. Garmin wiped out $1.2 billion in market cap alone. TomTom over the summer introduced their iPhone GPS app for $100 which was warmly received by critics but if Google is offering their GPS app for free, I doubt many people will complain.
Some salient points to keep in mind:
- TomTom owns their own mapping data called Tele Atlas. They purchased it a couple years back.
- Garmin doesn’t own any map data. Garmin licenses it from Nokia who owns Navteq. This business decision was initially praised by analysts because the analysts felt Garmin could focus on developing better GPS units without having to over leverage itself. This will be interesting to see how it all plays out, especially with Garmin’s soon to be released GPS phone.
- Google has tons of information (traffic, weather, Street View, etc.) and it’s only a matter of time before they can blend all that seamlessly into a augmented reality app.
- No one is safe from Google. You have Google Documents vs. Microsoft Office, Google Chrome OS vs. Win 7 vs. Apple’s OSX, Android vs. iPhone vs. BlackBerry, Google vs. Bing/Yahoo search, and now Google vs. Garmin vs. TomTom
I think in the short-run, this will hurt Garmin and TomTom (less casual users inclined to purchase standalone GPS units) and in the long-run, TomTom will either die because they lack any superior alternative and Garmin may get hurt really badly if their NuviPhone fails to take off (Garmin has a stronghold on marine and aviation though, and these niche markets are probably unappealing for Google to attack). With that said, consumers will benefit immensely from cheaper GPS units and greater competition. The only upside I see owning a standalone GPS unit is probably battery life and maybe faster map caching since the maps are stored locally instead of downloaded over-the-air (OTA). My initial thoughts on the weakness of Google’s Navigation is that it won’t appeal to the long distance travelers who want to travel interstate due to the need for a constant cell signal (if you don’t have 3G, forget about even using it) and poor battery life (users will need to balance GPS and talk time).
Finally, Verizon is really taking the gloves off this time around. Known notoriously for purposely handcuffing their phones by restricting certain phone features, Verizon is hungry to go after unhappy Apple iPhone users. This new phone is open source and features some apps that Verizon traditionally charges for (e.g. GPS). Competition is a good thing, but when your competitor is offering it for free, what can you possibly do?