En route to profits

It used to be a TV comedy staple. A husband and wife are out driving with a paper map spread out between them. One of them reads the map incorrectly and the ensuing hilarity would be stretched out over the course of the next half hour.

It’s a scenario that has all but vanished from the modern lexicon of culturally relevant humour – a change that can be attributed to the introduction of one device: sat nav.

The dawn of the personal navigation device saw a rapid rise in popularity as consumers rushed to buy and vendors jostled to sell.

"The sector immediately saw massive growth because they are devices that genuinely meet a human need," says Widget’s executive chairman Mark Needham. "With a personal navigation device, you can never get lost. Before they hit the market, there was a survey on the causes of failed marriages and a high percentage of marriage difficulties were exacerbated by arguments over navigation.

"In that respect, I would go so far as to say that they have actually added to the sum of human happiness."

TomTom’s sales and marketing manager Damian Woodward confirms these statistics: "The reduction of stress while driving is one of the key benefits of using GPS – a study found that 74 per cent of drivers felt less stress when using sat nav. They have also been found to increase efficiency and improve safety. In fact the RAC has offered cheaper car insurance to those drivers who use GPS while driving."

"Sat navs first appealed to young gadget lovers and have since become easier to use and much more reliable, plus hardware and mapping has improved," says Navevo’s sales and marketing manager, David Guiver.

"Companies have also been a major driving force behind the popularity and consequently sales of GPS devices, seeing the benefits in time and cost saving of equipping a mobile workforce with Sat nav. I can imagine all professional drivers now consider GPS on par with a mobile phone as an essential everyday work tool."

The sector has seen steady growth for the last decade but there have been casualties along the way, most notably Sony, which decided to bow out of the vehicular GPS market. However, recent economic trends have seen growth slow and even fall in some cases, which begs the question: has the market peaked?

"The market is likely to steady out in the near future, but on the other hand Widget has listed been on The Sunday Times growth charts for the last two years and I don’t think the market is even close to peaking," says Needham.

"Absolutely," adds Widget’s managing director Jo Foreman. "At this time, market penetration stands at less than 25 per cent. The big players in the sector would like to see that figure raised to 50 or 60 per cent, which is a realistic objective for future growth."

"Despite perception, this is still a very young market," confirms Woodward. "We consider 60 per cent to be the natural level of penetration in a mature market."

The biggest market for navigation devices so far has been those people who simply need to get from A to B, generally for business reasons. The future of the sat nav sector will be in tempting domestic users to make a purchase, a crucial point that is not lost on the vendors.

"We feel you will see more dedicated devices that will focus on lifestyle choices emerging, such as city guides or off-road driving, or constraints such as disability," says Guiver. "We launched BBNav which caters for the Blue Badge driver and carers of people with mobility restraints or a disability."

"There is a need to make the current technology more appealing," adds Woodward. "This means the addition of dynamic content and live content. Our HD Traffic system tracks mobile phone SIM cards to deliver real time information on road movement. Existing systems cover 40 per cent of roads and update every half an hour, while HD Traffic covers every Vodafone user and updates every three minutes. The improvement is obvious."

It’s clear that the personal navigation device is still a work in progress. With integral features continually being added by vendors and comparatively low market penetration, it’s an evolving segment with plenty of room to grow.