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GPS Mobile Phones: the Next Gold Mine?

With the appearance of GPS mobile phones, the question of how to boost their large-scale commercialization has become the focus of all manufacturers in this industry chain.

In addition, its appearance also presents a non-negligible market for the navigation map software manufacturers and is helping mobile telephone manufacturers to develop new demand and seek market segments with bigger potential.

Although GPS mobile phones have not yet reached a considerable market scale, the business opportunities they provide are attracting all kinds of manufacturers.

In the domestic GPS application market, automobile navigation has been dominating the market, especially the before-market, but this situation is changing: mobile navigation is powering the growth of the GPS application service market, which is enjoying a greater market share than automobile navigation, and mobile phones are one of the best carriers of mobile navigation systems.

The current mobile phone value-added service market is being saturated. MMS and CRBT have been used extensively and people are paying greater attention to GPS mobile phones.

The GPS mobile phone market is heating up and more manufacturers joining in

Presently, many enterprises and a lot of capital have flooded into the GPS mobile phone market. The major enterprises can be divided into three categories: the first are manufacturers of terminals in the lower stream, such as Nokia, Amoisonic, Dopod, Mio, CoolPAD and Lenovo, the second are enterprises engaged in electronic maps and chips in the upper stream, such as Careland and SiRF, and the third are enterprises engaged in both upper stream and lower stream businesses, such as Chengjitong.

In the face of the growing navigation service demand in China, especially the current 500 million mobile telephone subscribers in China, GPS mobile phones enjoy a promising market in the long run and this field is becoming more attractive.

This comes on the heels of the entrance of many enterprises with lots of capital, advanced technologies and adequate clients as well as a rich market supply.

Wireless service operators also provide clients with the navigation service as a key value-added service in order to balance out the pressure caused by the drop in the income per capita.

According to a study by CCID Consulting, the wireless Internet service is having a bigger share year by year, while wireless navigation users are mostly mobile phone users and the competition in this field as well as the huge consumption demand would boost the rapid development of GPS mobile phones.

GPS mobile phones break the bottleneck of intelligent mobile phones

The Intelligent Mobile Phone has developed to the third generation, namely the "Service Phone" age. The Service Phone, such as the Google Phone released by Google and the iPhone released by Apple, has attracted numerous consumers by virtue of its functions and application services.

It provides professional services supported by multiple networks besides providing the traditional information service.

Presently, the Intelligent Mobile Phone is facing a relatively awkward market, as it is being challenged by multimedia mobile phones, with features of a music player and/or a camera. How can the intelligent mobile phone get out of hot water?

The multimedia mobile phone is becoming more and more powerful as more functions are being integrated?

As the 3G license release is delayed, telecom operators and mobile telephone manufacturers relying on content supply and application services are seeking new service growth points.

Now, the built-in digital camera and the audio/video functions of mobile phones have developed to a very high level. The mobile TV standard has not yet been released.

Therefore the GPS navigation service has become a new point of breakthrough and it is expected to become a segment market yielding huge profits in the future.

In accordance with a survey of consumers on the GPS mobile phone purchasing capacity conducted in July 2007 by CCID Consulting, 42.7% of the consumers prefer to purchase navigation products with Intelligent Mobile Phone as the carrier when being asked what type of GPS mobile phones they prefer.

GPS mobile phones face risks in the process of building a healthy industrial chain

Despite the huge market potential of GPS mobile phones, GPS has not been commercialized in the mobile market on a large scale.

Consumers' understanding of GPS mobile phones is still at a low level and the maturity of the industry and related technologies determine, to a great extent, whether GPS mobile phones can be generalized on a large scale or not.

The passion of industrial circles for GPS mobile phones originates from the huge market potential, but we must be clear that the industry chain with GPS mobile phones in the core is relatively weak.

Although the GPS mobile phone combines market demand and technical development in a satisfying way, mobile phones with GPS navigation has not won a large-scale market in China.

CCID Consulting thinks that the GPS mobile phone application would be greatly boosted and the development bottleneck would be removed if the following problems can be settled.

First, the cost of current GPS mobile phones is high and the market demand is still in the cultivation stage.

The precondition for the generalization of GPS mobile phones is a reduction of the service cost, including the composite cost for product purchase and service purchase.

In accordance with the survey of consumers on the GPS mobile phone purchasing capacity conducted in July 2007 by CCID Consulting, 38.8% of the consumers choose mobile phones priced at 1000-2000 yuan and also quite a few consumers choose products priced at 2000- 3000 yuan and 3000-4000 yuan (£1 = 15.27 Yuans).

In the present market, the supply of GPS mobile phones is not adequate and the products are also priced high.

Second, it is more necessary and important for GPS mobile phones to provide value-added services. As navigation is only a bridge to available map outlines, there should be rich and practical information services behind the navigation as well.

GPS mobile phones are in a relatively long industrial chain and the manufacturers in this chain include the electronic map suppliers, software, SP and chip technology supporters, telecom/network operators and terminal device manufacturers.

All links are necessary and form a lineup that can't be expected of traditional mobile phone value-added services and more links are joining this chain.

It is the view of CCID Consulting that mobile phone navigation coupled with dynamic navigation and network navigation would be a perfect market mix.

The dynamic navigation would promote the consumer experience greatly and provide consumers with more information at the same time.

The network navigation can graft the navigation services provided by operators and reduce the impact from Internet service by combining the navigation services based on mobile network and wireless Internet technologies.

In this way, the impact from Internet service can be settled (Google and Yahoo have already added the mobile navigation service to their map service).

Third, GPS mobile phones are still in the initial stages of development, and the supporting environment is not yet sufficient, restricting enterprise innovation and development.

Besides requiring terminal support, GPS also needs specialized electronic map software companies to provide precise and uninterrupted map information and this service needs to be reinforced as it has just got off the mark.

In accordance with the survey of consumers on GPS mobile phone purchasing capacity conducted in July 2007 by CCID Consulting, users regard the GPS mobile phone navigation function to commonly have these four aspects, namely

GPS navigation stability, GPS navigation accuracy, GPS navigation accessibility and GPS navigation reactivity and about 10% of the users think GPS mobile phones have many problems, which reduces the use value of GPS mobile phones greatly.

In addition, China's policies are not strongly supporting GPS development. The country is cautious when making investment into the satellite navigation industry and is not strongly supporting enterprise development.

There are few qualified individuals engaged in satellite navigation and the strategy for the development of the satellite navigation industry is not clearly delineated.

Despite the deficiency of GPS mobile phones, we should not deny the value and potential of this newborn thing.

But the present GPS mobile phone market is not mature and associated products and environments need to be enhanced and improved.

Despite problems, such as a low level of acceptance, a backward industrial environment, and relatively high product price, no one doubts the promising future of the GPS mobile phone market.

GPS navigation is likely to become a golden nugget to mobile operators following MMS and CRBT. At least, this is the hope of other participants in this field, such as mobile telephone manufacturers and map software developers.

Of course, future prospects need advance market cultivation. The GPS mobile phone service operators needs to attach importance to the exploration of service patterns on the basis of making in-depth studies of user demand and create effective and valuable communication with end users.

The terminal manufacturers need to reinforce the development of GPS mobile phones in accordance with the service demand and implement the differentiated product development strategies aimed at user demand.

Content suppliers, especially map software developers, need to update service content, guarantee service value and innovate useful new services.

Désiré has been musing and writing about technology during a career spanning four decades. He dabbled in website building and web hosting when DHTML and frames were en vogue and started writing about the impact of technology on society just before the start of the Y2K hysteria at the turn of the last millennium. Following an eight-year stint at where he discovered the joys of global tech-fests, Désiré now heads up TechRadar Pro. Previously he was a freelance technology journalist at Incisive Media, Breakthrough Publishing and Vnunet, and Business Magazine. He also launched and hosted the first Tech Radio Show on Radio Plus.