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GPS means Greater Profit Share

GPS means Greater Profit Share

ARN Home crosses the increasingly blurred boundaries between consumer electronics (CE) and information technology (IT). The market for Global Positioning Systems (GPS) is one that can be addressed by players from both camps.

This satellite navigation system has been designed, funded and controlled by the US Department of Defence (DOD). It costs consumers nothing to receive and use the signals.

GPS has 24 satellites orbiting the earth every 12 hours on the same repeated pattern so we know where they are. There are six orbital planes, with four satellites in each equally spaced 60 degrees apart, inclined at about 55 degrees with respect to the equatorial plane. This provides users with between five and eight Space Vehicle (SV) points visible from anywhere on Earth.

To use GPS as a navigation device in a car you need a GPS receiver that converts four SV signals into the four dimensions of X, Y, Z (position) and time (usually built into a dedicated device or supplied as an external Bluetooth unit); a device that runs navigation software (like a dedicated device, PDA or notebook); digitised maps; and an adequate power source.

Consumer grade GPS has a claimed accuracy of within 100m (many receivers quote 20m or less but this is dependent on the quality of the SV signal and the GPS receiver). For practical purposes, consumer grade is fine for INVS and PDA use.

Beyond the technicalities, GPS devices are hot at the moment and, whether from a CE or IT background, retailers need to get in on the act and maximise the bundling opportunity these must-have gadgets offer.

They are hot because they appeal to the baby boomer segment, which typically has disposable income and likes playing with new toys. These people also like the convenience of not having to refer to maps to get around and some people are even suggesting GPS devices are a marriage saver. In May 2005, Acer estimated about one-third of its PDAs were being sold to be used specifically as GPS devices - this functionality had become a great market driver for an otherwise flat product segment.

TekPlus, A UK IT consulting firm has estimated the global GPS market at about $US20 billion. It is growing at a rate of more than 25 per cent a year. Some 70 per cent of that market is fuelled by in-vehicle navigation systems (IVNS) and the mobile (PDA) navigation segment.

Businesses like GPS devices because they make keeping a vehicle logbook so much easier, help sales staff to find parking and petrol stations, allow less experienced drivers to navigate unfamiliar locations, identify traffic camera locations and reduce trip times by choosing shortest, fastest or toll routes. They also track where a driver has been.

Mobile phone manufacturers plan to make people tracking GPS a standard part of handsets within two generations, which should be some time early next year. That will provide enormous drive to the IVNS and PDA market because more consumers will understand how useful GPS can be. There are already GPS adventures available at www.geocaching.com. Search your postcode to see how this has taken off.

So how can CE and IT retailers tap into this market?

CE generally means sell and forget commodity products that are out-of-the-box, all-in-one units that plug into a cigarette lighter and don't need rocket science to get from A to B. This market is dominated by TomTom, Garmin, Navroute and Destinator. They are all reasonable products that mostly use the UBD Sensis maps and the main difference is in how they relay directional information to the user.

Now for the IT market. There is software such as TravRoute's Co-Pilot that runs on PCs, notebooks and PDAs. All you need to do is add a Bluetooth or serial GPS unit, there are plenty of different brands and most work well, and perhaps a windscreen mount.

This market can be owned by IT retailers so don't ignore it - you have always been better at providing pre- and after-sales support, which will be key to dominating this market.


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