Satellite navigation market continues to soar

"We are seeing a price decline of 30 percent a year globally," Bonte said. "This simply cannot continue. I expect this to slow down because it's unsustainable. Much of this is manufacturers dumping their low-end models."

High-end PNDs with features like digital music players, speech recognition capability and traffic receivers remain in the $400 to $500 range, and these hold their value better, he said.

By 2011, ABI Research projects global sales of more than 100 million PNDs, 62 million satellite navigation-equipped phones, 14 million manufacturer-installed car systems and 4 million after-market car systems.

A major question mark, according to Bonte, is whether satellite navigation-equipped phones eventually will erode the market for PNDs, much as smart phones did for personal digital assistants. Such an outcome is far from inevitable, he said, noting that the market for portable music players remains strong despite the widespread incorporation of this technology into mobile phones.

"ABI Research is convinced PNDs will continue to be the most popular device, because they are optimized for in-car navigation with big screens, speech recognition, touch screens and built-in FM transmitters," Bonte said. "I expect people will have more than one navigation device. They will have one in their cars, and at the same time, they will have handsets for pedestrian mode."

Jason Kim, a senior analyst at the U.S. Commerce Department's Office of Space Commercialization, thinks the global satellite navigation hardware market is far from saturated and will continue its strong growth.

"I think prices haven't dropped that much," Kim said. "Capabilities have increased at each price point, but the most desirable units are still at the $300 or $400 level and have been for a long time. Capabilities will continue to increase, but it won't be until we're near the $50 level before people will really be crazy about it."

Today, the U.S. GPS constellation is the only fully functional global satellite navigation system. As emerging systems such as Russia's Glonass, Europe's Galileo and China's Compass become fully operational, even more people will become satellite navigation users, he said.

"As more and more systems come on line, it's just going to become more appealing," Kim said. "I think the end user doesn't care where it comes from or who owns it, but there is already a lot of marketing being done to increase adoption of [countries'] own national systems. And economies of scale will allow chips to be built for even less than they are now."

The possibilities for satellite navigation, much like the Internet, are limited only by the human imagination, Kim said. For example, he said, future business models could even incorporate an advertising component.

"The sweet spot is not yet a reality: your mobile phone tells you you're near a McDonald's and sends you a coupon for it. That has been talked about as what's next for 10 years, but nobody's done it yet."

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