Google’s Impact on GPS Devices

When the Motorola Droid was released as the first ever Android 2.0 phone, it included the new Google Maps Navigation.  And subsequently sent GPS giants such as Garmin and TomTom reeling.  Why did Google Maps Navigation have such an impact, and what does it mean for the future of the GPS industry?

The hit on the GPS industry was significant.  Garmin, who was just beginning show signs of life after a disastrous 2008, was rocked by the launch of the Droid, with stocks falling 28.9% in the week between the announcement of Google Maps Navigation and the launch of the Droid on Nov 4th, 2009.  Netherlands based TomTom suffered greater losses, with stocks falling a whopping 41% almost overnight.  So what happened?

Well to begin with, Google Maps Navigation (Let’s just call it Google Nav from now on… easier to say) is free.  Kind of.  OK, it is free with every Android 2.0 phone.  Unfortunately the Androids aren’t free.  The only one currently in existence is the Droid, and it sells for a heart stopping $559 unsubsidized.  With contract the price is significantly lowered, but it still ranks as one of the more expensive smart phones on the market.  So while the software to run Google Nav is free, the device to use it isn’t.

So if price is a wash, why the uproar?  The real victory for Google was with the maps themselves.  Google Nav uses the same data backbone that Google Maps uses.  And because the data is stored in the cloud as opposed to on the device, the maps are always up to date.  No need to hook the GPS up to the Internet, no need to pay exuberant update prices.  Instant, free map updates.  THIS is the real coup de grâce. 

In order to compete, the GPS companies will have to do one of two things.  Either make their interface SO much better than consumers would be OK with spending the extra money for data, or make their data free as well.  Truth be told, they will probably have to do both.  It will be interesting to see the response from Garmin and TomTom in the next six months.