Google just demolished an entire industry - GPS will never be the same
Google unveiled a revolutionary GPS guidance unit for smart phones running Google's Android operating system. Its super advanced, and best of all its
free. How can other GPS sectors compete? I want one.
This led to the pummeling of GPS makers Garmin (GRMN) and TomTom (TMOAF), whose shares plunged 16% and 21%, respectively. TomTom shares kept falling the next day, dropping by 11% more. Collectively, those two GPS companies lost more than $2 billion in market cap. Even shares of iPhone maker Apple (AAPL) fell by a startling 5%, more than retracing all the recent gains the stock had made after posting stellar earnings last week.
Two years ago the GPS industry was an incredibly robust sector, and for good reason. A GPS unit in a car had, over the course of a few short years, become both cheap and essentially mandatory. As an application, GPS by Garmin, TomTom and other makers, was extremely useful, making it much easier to navigate to unfamiliar destinations without resorting to a map or relying on a co-pilot riding shotgun.
Still, these devices were largely disconnected from the internet, portraying static images of roads, relying on downloads to upgrade maps and providing limited capabilities to route a driver around traffic hazards. And they were rather inflexible.
For example, everyone in San Francisco knows that taking the 101 Freeway south in the mornings into Silicon Valley is horrible compared with taking the equally speedy and far less trafficked 280. Good luck convincing your GPS unit to send you on the 280 instead of the 101. Sure, it can be done, but it's not intuitive and it surely isn't simple.
Need Directions? Just Ask
Now along comes Google with its new Google Navigation service. First, there's the price, which is free. Very hard to compete with that. Second, Google beats the pants off the existing navigation devices by allowing voice commands. You tell your phone where you want to go, and it will guide you there.
And you don't have to use exact addresses. Rather, you can say "I want to go to a Chinese restaurant in Palo Alto," and it will give you a menu of Chinese restaurants in or around the city. Pick one, and Google guides you there.
It also has real-time traffic information, which is both free (most other GPS systems charge for it) and more accurate. Then there's the high-fidelity satellite imagery from Google Earth that gives drivers an actual picture of the street-level surroundings as you drive a route.
It's a wonder the shares of the GPS guys didn't fall further. But this is a classic case of how Google, with one shrug and the ability to tap into its vast store of data, can completely redefine product categories and turn entire segments into mere features on the global Google operating system.
Multiple Whacks at Apple
Why were Apple shares tumbling? First, Google Navigation is clearly the killer app that could push consumers to quickly move to Android. The iPhone has no app for that, yet. Second, Google Navigation cuts to the very quick of Apple's business model. GPS navigation applications on the iPhone are among the priciest, running from $50 to $100 per download. Remember, 30% of that money would be going to Apple.
GPS applications also provided one of the most compelling reasons to pay for an actual subscription service in order to get faster map updates and real-time traffic info. That's another revenue stream gone in a Google second.
Since most pundits were expecting the entire GPS segment to migrate over to smart phones, that could conceivably mean, over time, billions of forgone revenues for Apple. It's hard to get people to pay for things when a perfectly good version is free.
http://www.dailyfinance.com...
http://gizmodo.com/5391408/...
By netchicken:
posted on 1-11-2009
This led to the pummeling of GPS makers Garmin (GRMN) and TomTom (TMOAF), whose shares plunged 16% and 21%, respectively. TomTom shares kept falling the next day, dropping by 11% more. Collectively, those two GPS companies lost more than $2 billion in market cap. Even shares of iPhone maker Apple (AAPL) fell by a startling 5%, more than retracing all the recent gains the stock had made after posting stellar earnings last week.
Two years ago the GPS industry was an incredibly robust sector, and for good reason. A GPS unit in a car had, over the course of a few short years, become both cheap and essentially mandatory. As an application, GPS by Garmin, TomTom and other makers, was extremely useful, making it much easier to navigate to unfamiliar destinations without resorting to a map or relying on a co-pilot riding shotgun.
Still, these devices were largely disconnected from the internet, portraying static images of roads, relying on downloads to upgrade maps and providing limited capabilities to route a driver around traffic hazards. And they were rather inflexible.
For example, everyone in San Francisco knows that taking the 101 Freeway south in the mornings into Silicon Valley is horrible compared with taking the equally speedy and far less trafficked 280. Good luck convincing your GPS unit to send you on the 280 instead of the 101. Sure, it can be done, but it's not intuitive and it surely isn't simple.
Need Directions? Just Ask
Now along comes Google with its new Google Navigation service. First, there's the price, which is free. Very hard to compete with that. Second, Google beats the pants off the existing navigation devices by allowing voice commands. You tell your phone where you want to go, and it will guide you there.
And you don't have to use exact addresses. Rather, you can say "I want to go to a Chinese restaurant in Palo Alto," and it will give you a menu of Chinese restaurants in or around the city. Pick one, and Google guides you there.
It also has real-time traffic information, which is both free (most other GPS systems charge for it) and more accurate. Then there's the high-fidelity satellite imagery from Google Earth that gives drivers an actual picture of the street-level surroundings as you drive a route.
It's a wonder the shares of the GPS guys didn't fall further. But this is a classic case of how Google, with one shrug and the ability to tap into its vast store of data, can completely redefine product categories and turn entire segments into mere features on the global Google operating system.
Multiple Whacks at Apple
Why were Apple shares tumbling? First, Google Navigation is clearly the killer app that could push consumers to quickly move to Android. The iPhone has no app for that, yet. Second, Google Navigation cuts to the very quick of Apple's business model. GPS navigation applications on the iPhone are among the priciest, running from $50 to $100 per download. Remember, 30% of that money would be going to Apple.
GPS applications also provided one of the most compelling reasons to pay for an actual subscription service in order to get faster map updates and real-time traffic info. That's another revenue stream gone in a Google second.
Since most pundits were expecting the entire GPS segment to migrate over to smart phones, that could conceivably mean, over time, billions of forgone revenues for Apple. It's hard to get people to pay for things when a perfectly good version is free.
http://www.dailyfinance.com...
http://gizmodo.com/5391408/...