In 2007, PNDs accounted for about half of all navigation device shipments, with the remainder divided up among automotive in-dash systems, smart phones and mobile handsets. However, by 2010, the PNDs' share of shipments will decline to 35 percent and then to 23 percent in 2013.
"PNDs have flourished in an environment with little competition during the last four years," said Richard Robinson, principal analyst at iSuppli. "Being less expensive and easier to obtain than in-dash systems, and much easier to use than mobile handsets, PNDs have been the navigation product of choice for global consumers. However, there will be a significant cannibalization of the PND market by low-cost in-vehicle solutions and wireless handsets in the coming years."
In 2011, navigation-enabled mobile handsets will grow to account for 36 percent of total navigation system shipments, for the first time surpassing PNDs as the highest-volume platform. PND shipments will account for only 30 percent of the total market during that same year due to the fast growth of the other platforms.
The PND market is ending its fast-growth phase and moving into a stage of maturity. After achieving growth of 123.7 percent in 2007, global PND unit shipment increases will slow to 43 percent in 2008 and to 23.5 percent in 2009.
Meanwhile, shipments of navigation-enabled mobile handsets will rise by 91.4 percent in 2008 and 70.6 percent in 2009. Shipments of navigation-enabled smart phones will increase by 66 percent in 2008 and 51.6 percent in 2009.
iSuppli defines navigation-enabled smartphones as multifunction mobile handsets that can serve as PNDs due to their inclusion of GPS receivers and navigation application software. Navigation-enabled mobile handsets are E911 location-capable 3G handsets that have the potential to add navigation functionality.
While the PND market will still generate significant sales opportunities for PND makers and their suppliers over the next few years, the industry is likely to undergo consolidation, with many companies expected to leave the market.
"Strong PND price erosion witnessed in 2007 and 2008 will lead to consolidation in the sector in 2008 and 2009, with smaller vendors exiting the market because they will be unable to achieve the volumes and economies of scale needed to operate profitably at these price points," Robinson said. "The survivors will be those companies that successfully build economies of scale in the supply chain and that achieve reductions in engineering, hardware and silicon costs in order to keep pace with rapidly declining prices," Robinson said.
The under-penetrated market for in-vehicle navigation continues to be the main growth driver for PND sales. However, other factors are contributing to continued PND sales growth, including the decline in the average price per unit that has lowered the barrier to ownership for a significant consumer demographic, which is typically price sensitive.
Until now, the traditional tier-one suppliers for automotive electronics companies have dominated the in-dash navigation system market. However, this is expected to change as carmakers seek less costly approaches to vehicle navigation.
"The push by vehicle OEMs to roll out lower-cost in-dash navigation systems will pose a significant threat to the existing tier-one electronics suppliers around 2012, potentially opening up the market to competition from non-traditional OEM hardware and software manufacturers such as Garmin and TomTom, or even handset makers like Nokia and Samsung," Robinson said. For more information on this topic read iSuppli's upcoming report entitled: Navigation Systems: In-Dash, Wireless and PNDs; The Fight is On.
