Satellite navigation market continues to soar

By Turner Brinton

updated 2:07 p.m. ET Jan. 14, 2008

The global market for satellite navigation hardware continued its scorching pace in 2007, resulting in big profits for the major hardware manufacturers, and analysts predict sales will grow more than $20 billion by early next decade.

ABI Research, a market research firm in Oyster Bay, N.Y., estimates last year's market for satellite navigation hardware was $33 billion, a $6 billion increase from 2006. The company attributed the growth to falling prices for all types of hardware and dramatic volume increases in the sales of Portable Navigation Devices (PND) and satellite navigation-equipped mobile phones in Europe and North America.

The company forecasts the satellite navigation market growing to $54 billion worldwide by 2011.

The two largest manufacturers of PNDs, Kansas-based Garmin International and Netherlands-based TomTom NV, each shipped a record number of units during the third quarter 2007 — 2.7 million and 2.2 million, respectively. The two companies manufactured nearly half of the PNDs sold last year.

Garmin anticipates 2007 revenue of more than $2.9 billion and reported a profit of $547.7 million through the first three quarters, up 39 percent from the same period in 2006. TomTom anticipates 2007 revenue of 1.7 billion euros to 1.8 billion euros ($2.6 billion to $2.7 billion as of Oct. 24) and reported a profit of 211 million euros through the first three quarters, up 32.7 percent from the same period in 2006.

Magellan GPS of Santa Clara, Calif., the world's third largest maker of satellite navigation devices, does not release financial data, but marketing director Robert Snow said sales last year far exceeded the company's expectations.

"Our consumer satellite navigation products saw the biggest growth in North America, but Magellan also made substantial inroads in Europe," Snow said.

Dominique Bonte, a telematics and navigation analyst at ABI Research, said 2007 saw consumers moving away from factory-installed satellite navigation systems in cars and toward PNDs and satellite navigation-equipped mobile phones. ABI Research estimates the global market for PNDs jumped from 12 million units in 2006 to 24 million units last year, and Bonte said that figure could be as high as 27 million units following a late-year surge. Sales of mobile phones equipped with satellite navigation more than doubled in 2007 to 5.1 million units.

Bonte said the surging popularity of consumer navigation gear can be attributed in large part to falling prices. PND prices fell from $450 to $300 on average over the last year, while mobile phones with satellite navigation capability dropped from $100 to $85. Factory-installed car navigation systems dropped on average from $2,000 to $1,800, and integrated after-market car navigation systems dropped from $1,200 to $1,100.

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