Google disrupts another industry:
Google Steps Into Another Market: GPS for Phones
By MIGUEL HELFT
New York Times
October 29, 2009
MOUNTAIN VIEW, Calif. — In a move that is likely to be seen as an attack on yet another industry, Google on Wednesday said it would release a free navigation system for mobile phones that offers turn-by-turn directions.
Analysts said that Google’s free service, if successful, could erode the sales of GPS navigation devices made by companies like Garmin and TomTom and of navigation services offered by cellphone carriers.
“There’s no doubt that those guys are going to be disrupted,” said Greg Sterling, an analyst with Opus Research.
Google has sowed animosity in various business sectors by giving away products and services that others charge for, from digital voice mail to Web analytics tools.
But during a briefing with reporters on Tuesday, Eric E. Schmidt, Google’s chief executive, said he didn’t think of the new service as disrupting an industry. Instead, he said it is a windfall for consumers that was made possible by the increasing power of smartphones and the growing ubiquity of Internet access.
“Obviously we like the price of free because consumers like that as well,” he said.
After the briefing, Mr. Schmidt said he was not concerned that the new service would create new enemies for Google. “As long as you are on the side of consumers, you’ll be fine,” he said.
The new service will be available as part of the latest version of Google Maps for Mobile, which will be released along with the new version of Google’s Android operating system for mobile phones, called Android 2.0. Separately on Wednesday, Motorola and Verizon Wireless unveiled Droid, the first smartphone to be powered by Android 2.0.
Google executives said that they hoped that the new Google Maps for Mobile with navigation capabilities would eventually be available on Apple’s iPhone and other devices. But they said it was up to the makers of those devices to decide whether to include the application.
Google said that its turn-by-turn navigation system may be supported by ads in the future.
To be sure, Google’s new service, which has long been expected, will not change the market overnight. Currently, 21 percent of American adults own a personal navigation device, and that market is expected to continue growing at 33 percent a year for the next five years, according to a recent study by Forrester Research. However, by 2013, phone-based navigation systems, which are more popular with younger users, will dominate the market, the study said.
Google’s entry into the market will accelerate the transition, said Charles S. Golvin, an analyst with Forrester, who conducted the study.
“People are going to be moving to the phone-based solutions, but if it is free, they are going to be moving even quicker,” he said.
Currently many personal navigation devices cost from $100 to $300. Navigation services on mobile phones offered by carriers like Verizon Wireless or AT&T cost about $10 a month, though they are increasingly being bundled in packages that include other features.
Anticipating the move to smartphones, device makers have been creating applications to run on them. TomTom, for instance, recently introduced an iPhone application that costs $100.
The market for Google’s new system will be limited, at least initially, to the number of phones running Android 2.0.
As mobile applications that exploit a user’s location become increasingly important, the underlying mapping data has become a valuable strategic asset. Google recently began creating its own digital maps in the United States, ending a contract with map data provider TeleAtlas, which is owned by TomTom. A year earlier, Google had chosen TeleAtlas to replace Navteq, a map data provider that Nokia acquired for $8.1 billion in 2007. Google and Nokia are rivals in mobile phone operating systems.
Google executives said that the company’s navigation service is better than some rival systems because it is always connected to the Internet. It can, for example, provide live updates on traffic conditions and conduct searches for restaurants along the route. It also recognizes voice commands. During a demonstration, a Google executive asked for directions to a “San Francisco museum with a King Tut exhibit” and the service correctly offered directions from Google to the de Young Museum in Golden Gate Park, which is currently hosting a show called “Tutankhamun and the Golden Age of the Pharaohs.”
Copyright 2009 The New York Times Company
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