Can Navteq survive on $30 apps?

mvl

Can Navteq survive on $30 apps?

With prices on good iPhone turn-by-turn apps dropping to $30, how can Navteq survive? I'm sure their original road-mapping business model was built around $200 in-dash DVDs.

How can they continue to provide quality map driving/research at such a cheap sales price? I'm assuming Nokia won't be willing to subsidize a Navteq division loss for too long.

patruns

I'm betting that the increase in numbers of people using a GPS since the original business plan has made up for quite a bit of the profit. On top of that, Nokia Maps may be free on Nokia devices, but if you want navigation from them you have to pay a subscription fee. That's another revenue stream available.

Tim

With prices on good iPhone turn-by-turn apps dropping to $30, how can Navteq survive?

I might ask the question in reciprocal. How can a navigation app developer survive offering apps for $30 at such thin margins?

patruns

With prices on good iPhone turn-by-turn apps dropping to $30, how can Navteq survive? I'm sure their original road-mapping business model was built around $200 in-dash DVDs.

I also think perhaps the iPhone media hype may overestimate the impact. There are many of us who do not have nor will we buy an iPhone. I have a nav app on my phone, but I much prefer the dedicated unit. I think for the most part this will primarily draw on people who did not have a gps before and probably weren't going to get one except for the low app price. Best use of it I believe is for pedestrian mode as it is just one small item to use that you are probably carrying already. A lot of people do not have data plans, nor are they willing to pay for them at the current prices. Most phone apps require some gprs usage in order to assist in locating and to navigate.

gatorguy

MVL. I suspect TeleAtlas is pricing their maps competively with Navteq. And some of those $30 apps are using TeleAtlas maps. Can TomTom subsidize TeleAtlas any better than Nokia can Navteq? I don't think any of us realize how cheaply map data can be purchased. Many of us assume it's $25 or more paid back to Navteq/TeleAtlas for our map updates. Personally I think it's closer to $5-7 as a guess, and it's been that way for awhile. Of course those maps then need to be adapted by the software or device manufacturer for their specific application, so they have some additional expense besides what is paid to the mapping company.

mvl

It almost seems that the prices have to be that low. Bud I'd be pretty steamed if my 2007 $180 Honda map DVD was $170 Honda revenue and only $10 Navteq revenue.

My suspicion with Teleatlas is that they're charging a ton for speed profiles. I haven't seen a single non-Tomtom vendor that has them yet.

Tim

Let's not forget too that PND companies are not the only ones purchasing map data/licenses from the mapping companies. Google, Yahoo, MSN, MapQuest.... those are all big customers for the mapping companies.

Everyone reading this knows that those companies don't create the map data themselves and know that the data isn't public domain. But you might be surprised at how much of the general public thinks that Google makes the maps of the USA and that the data is free for anyone to use how they see fit.

Tim

My suspicion with Teleatlas is that they're charging a ton for speed profiles. I haven't seen a single non-Tomtom vendor that has them yet.

That could be. Or it could be that other manufacturers don't think the additional data is easy enough to sell as a feature to the consumer-- too difficult to explain-- and thus they don't want the additional cost they don't think they could recoup.

patruns

It almost seems that the prices have to be that low. Bud I'd be pretty steamed if my 2007 $180 Honda map DVD was $170 Honda revenue and only $10 Navteq revenue.

I think that is a little too simple. Someone still has to make the navigation software. The map is just a database, just like you can't open up an .xls file without having some kind of software that can interpret it. Plus, you need the hardware as well. I would not be surprised if the cost paid to Navteq or TeleAtlas was not much less than a couple of years ago. If anything, they might be better off based on the sheer numbers of users as compared to a couple of years ago.

mvl

It almost seems that the prices have to be that low. Bud I'd be pretty steamed if my 2007 $180 Honda map DVD was $170 Honda revenue and only $10 Navteq revenue.

I think that is a little too simple. Someone still has to make the navigation software. The map is just a database, just like you can't open up an .xls file without having some kind of software that can interpret it. Plus, you need the hardware as well. I would not be surprised if the cost paid to Navteq or TeleAtlas was not much less than a couple of years ago. If anything, they might be better off based on the sheer numbers of users as compared to a couple of years ago.

I paid over $2000 for the Honda nav (the Honda with nav cost $2000 more than the same model w/o nav), I assume that paid for the software/hardware, as I got a fully functional system.It was well worth it, and I'd gladly do it again if the Honda had mapshare, IQroutes, and HD traffic, but it doesn't.

The $180 was purely a map upgrade (a new interstate was built in Boston in 07), containing identical (as far as I can tell) software, and it was shipped directly from Navteq (www.hondanavi.com).

These prices seemed "normal" to me. Everything I buy on a PND looks like a steal cost wise. And these iPhone apps just sound unsustainably cheap.

Boyd

And these iPhone apps just sound unsustainably cheap.

Not so sure about that. Ten years ago, would you have believed the amount and quality of mapping we now have available for free on the internet between Google, Microsoft, government agencies and other providers? I sure wouldn't have.

Also remember that the number of iPhones sold worldwide is approaching 30 million. That's a huge market and there should be economies of scale. But aside from all this, I don't think people will pay anymore than the current pricing for navigation apps. I am not even willing to pay that much personally since it's just not something that I want. For $100 you can buy a dedicated GPS which includes maps.

In the end, the market will decide as it always does.