Portable navigation device makers chart troubled waters

By John Tilak

BANGALORE (Reuters) - Portable navigation device makers are battling fierce competition, slowing growth and shrinking margins, and analysts say the industry needs to quickly make strategic changes to sustain growth.

The companies also have to contend with the rising threat from mobile phones equipped with global positioning systems, which are expected to grab more of the market.

While the companies continue to sell more PNDs, the growth rate is slowing and prices are much lower than a year ago, resulting in sluggish revenue growth and sliding margins.

"Portable navigation devices have started hitting commodity status as consumer demand and awareness have grown within the last two years," IDC analyst Diana Hwang said.

Basic portable navigation devices provide route maps on touch screens using global positioning system technology, and they are mostly mounted on car dashboards. Advanced models offer additional features like a Bluetooth wireless device, an MP3 player and an FM transmitter to play music through a car stereo.

A smartphone like the Nokia N95 does all of this while remaining a phone, but customers looking for a car navigation device still tend to go for a PND because of its larger screen.

About 26.6 million PND units will be sold in 2008, according to estimates from market research firm Gartner.

But the market is getting saturated as more companies are offering a slew of products at lower prices.