Google released a new mobile navigation app today and GPS navigation companies such as Garmin And TomTom saw their shares take a plunge. The announcement shaved $1.2 billion off of Garmin’s market cap alone. Its shares are down more than 16 percent so far today to $31.60. TomTom’s shares are down 21 percent to $8.11.
And this is just for an Android app. But Google could very well make it available to other phones as well, and that is what has investors worried. GPS navigation apps are among the most expensive, and most lucrative, of all mobile apps. TomTom sells its iPhone apps for $50 to $100, with a different app per country.
Google just cut the traditional GPS navigation companies at the knees by releasing what may be a far superior product for free. It is not a standalone navigation app. Rather it taps into a lot of the resources Google makes available on the Web, including Google Maps, Streetview, voice recognition, and sophisticated search. You can use voice search just as you would look for something on Google’s search engine. “Where is the Pizza Hut in downtown Palo Alto”? If Google’s search engine can find it, then so can Google’s navigation app. Garmin and TomTom can’t compete with that kind of Web-scale computing power.
And Google is happy to give its navigation app away for free because it leverages many existing technologies it has already built for the Web, and it encourages more people to use Web-capable phones and do local searches on them. Its strategy is to give the software away for free, and make money on the search ads.
Or this could be because the market has been tanking the past few days. Just a thought.
The market is down a couple percent. TomTom is down 10 times that much, and they both fell this drastically in one day, not a week.
Maybe put a little more thought into your thoughts before dribbling them out onto a public forum?
Maybe _you_ can put in a little more thought into finding what other announcements TomTom and Garmin made prior to this. Just a few hours earlier, TomTom had announced there’d be problems.
Can you think of anyone who went “OMG!!1 The Droid will make my GPS stock worthless! Sell sell sell!”. No? Figured as much.
You’re the one dribbling your silly correlation-causation bias. Go learn a little about the markets before you start commenting on stock movements.
No, you’re the one who’s being not clever here. The announcement of Google Nav App alone definitely suffice to make investors very worried. You still can’t understand or something? A possibly way better Navigation system integrated with sophisticated Google’s search engine for free. Does this sound not enough a threat to investors?
I don’t understand how anyone could look at that graph and say, “Oh, it’s just a normal day”. Uh, yeah. Did you hear the part where it said their respective stocks are down 16-20% each? Yeah, just another day. Surely nothing to do with Google.
Jesus H Christ.
Best response ever man. The knee comment might have been more fitting around the belt; taken out at the midsection.
I don’t think so. Google news is big news and this is quite a big drop.
Dude if you had a stock ticker, I’d be dumping you.
What you people don’t understand is that Garmin and any other GPS app is superior to Google’s app for the simple fact that they work offline. If Google does that, then I’ll give them what’s theirs.
I agree with zrgiu. I do not have smart phone or internet plans on my cell. I am going to prefer TomTom than Google which requires monthly internet plans which can run from 70 to 100 dollars on any cell phone plans which is called data plans. While TomTom is just one time payment of 99 dollars and it works. No further payments required.
Thats fine and I understand the logic of not wanting to pay for a data plan monthly. Feel free to continue using the TomTom/Garmin hardware. They will still serve a purpose and be a market for those. I just cannot foresee how TomTom can continue to charge over $200 for their TomTom to work on the iPhone with Hardware and App costs…
Lets see how long though those data plans stay up that high…that market is growing daily and with more and more phone coming out such as the Droid your going to see less and less phones without data plans…
$5 dollar tomtom will still sell to compete with google.
Not a valid argument – the article didn’t imply you go get a smart phone to get access to the app. This app is geared towards the tens of millions of existing users that HAVE a smart phone that will no longer have a need to pay for TomTom or Garmin’s services.
If you don’t have a smart phone that’s a perfectly valid argument. But many people do have smart phones these days, and they’re picking up steam every day. if you’re already paying for a data plan, the point is that this is 100% free, and looks very well done, so there’s no need to spend $100+ on a GPS nav system. That’s going to hurt these companies very badly.
There’s certainly an ongoing place for offline gps apps. I’ve used Telenav for years which works in a similar way to the new google maps app. I also use a TomTom app on my phone, have a handheld Garmin eTrex Vista for hiking and a Hummingbird chartplotter for my sailboat. Because there are plenty of times I don’t want to depend on internet access to figure out where I am.
But free, voice-enabled, google-powered turn-by-turn navigation takes a huge bite out of the market.
Here’s zrgiu and Niza, Circa 1995: I prefer using USPS to send simple letters. I don’t have an interweb connection or a computer, let alone an email address. All I have to do is pay for one 32 cent stamp and I’m done!
great post, Steveo, short, but says it all.
there were famous memos about not needing those fancy fax machines back in the day too.
What you miss Steveo is that the places you’re most likely to need a navigation app (e.g. when on vacation) are often the places with the worst cell phone/data coverage.
I’m thinking about ski resorts, for example. The TomTom or similar apps on the iPhone will work just fine in Vermont since the map data is stored on the device, but the Google navigation app will be SOL because of the lack of reliable cell data coverage.
Maybe not entirely SOL.
Eric at MotionX Drive said they are working on an upgrade to address temporary loss of signal.
As much as I like TomTom, my $28 MotionX Drive 1 year app is by far superior. I love it.
Ski resorts usually have good cell reception. To do otherwise is to risk losing customers to areas that do.
And perhaps do a little research next time. Google Maps GPS will cache map data for a given trip while it has a good connection, then use the cached data for those areas where it might have been “SOL”.
Michael, you’re spot on! Google maps does cache the data while connection available.
It’s called caching. Standalone GPS companies won’t go to the deadpool just yet, but their market is going to be DRASTICALLY reduced.
I think the point is that today Google’s offering is compelling and novel, within a couple of years google will have had them for lunch. Read How the Mighty Fall. Garmin and Tom Tom just got tumors. It’s up to them to treat the disease and survive.
competition is good. just not for the ones who are being crushed.
Yap. Now time to hear layoff news from tomtom and garmin
Or perhaps they’ll hire more talent and innovate. Let’s not assume they’re going to just roll-over and play dead either.
If this is how Google affects the GPS navigation market, I wonder how Microsoft and Apple will be impacted by Google OS.
apples to oranges, chubbs
More like Apples to Orchards.
Completely different scale.
And then, of course, there’s the lack of competition that exists once they’ve been crushed…
Thing is, Google just crushes EVERYTHING, thereby creating the biggest MONOPOLY ever.
Competition should be a state, not just a phase.
Well… Its hard to compete against FREE if you want to make money.
As long as the service is free i dont care about googles market share.
Any of the GPS companies could’ve made this product and made money on ads just as well as Google. Instead, they haven’t been innovative and have just continued to sell the same product for years for the same price.
They did make internet-connected devices, only they did it in a stupid way that only the top 1% of the market could affort.
Device: $500
Data plan: $30/mo
Services like weather and traffic are both ADDITIONAL charges every month!
That’s why I won’t miss them when they’re gone. Clearly they didn’t care about market share and only wanted maximum profit.
indeedSmack.
Also Garmin has a lock on the Maritime/airline nav market I believe. They should be okay. Tom Tom’s in deep doo doo.
Garmin certainly has the highest market share on aviation GPS, but there are plenty upstanding companies out there with quality products for aviation at a lower price, i.e. Lowrance. Not sure about maritime GPS, but I would say they are in a similar boat (pun intended).
Well TomTom offers quite a few business services and I’m pretty sure they make a nice little profit from this sector.
We use some of those TomTom business services and will continue to for delivery routing, truck tracking, etc. The Google app, as of right now, probably is not capable of half the features we would need as a business. Mostly because of software limitations(or the software needed doesn’t even exist) and some because of hardware limitations.
For personal use though you can bet your butt that Google will have an impact on TomTom and Garmin.
i like how you used a google finance chart to show google pwnage of their stocks
Ouch! As an Android user I welcome this move and can’t wait for 2.0 but it must suck to be at one of those companies and have one of your most promising future revenue streams pulled out from under your feet with one announcement.
Maybe they can go do something useful instead of sitting on their laurels. The Garmins I’ve tried at stores today have barely improved their UIs over the four year old unit we use.
I think this is the biggest problem the GPS only companies have to worry about. The UI on these devices sucks.
I use Google maps because I don’t have time to type in the address that I’m looking for in the complicated manner in which most of these guys demand it to be entered. (usually city name, then street name, then numerical address, with a whole “back out” process if I type anything in wrong. Ughhh)
GPSDrive for Iphone = Great… but it is online as well.
Googles will be awesome cause it is free. I pay for dataplan so when I am local I will use it… but Roaming charges are killer… therefore standalone apps are critical for those who travel.
I wonder if there will be a negative impact on the developer community because of this move. Will developers be less likely to build on Android given that Google may pull the rug out from under their feet as well? I think this is something MSFT was guilty of in the early days, no?
I don’t think Google pulled the rug out from anyone. Google has already been in the mapping and search space…areas that overlap with nav systems.
Fact is, Google is mashing up their own technologies here to a great degree. These are some of the same API’s Garmin and others have free access to develop on. Perhaps they should focus on innovating.
As far as other apps are concerned, I haven’t seen much evidence of Google’s interest in undermining the development community.
Are you kidding me? Because of Google Maps Navigation, developers are gonna have a ton of new customers buying Android phones!
Now, I think anyone who was doing something similar to what Google is doing now has seen the writing on the wall for a while.
Hm, I do not see how Garmin and TomTom compete long term with these free apps. Almost everyone with a cell phone is going to have affordable internet access within a few years so the comments above about offline access seem short-sighted.
What can Garmin and TomTom do?
LOL at the add for the Garmin nuvifone. Just glorious.
Wow, that chart says it all, even though many have not seen the app yet, just because it has Google’s name on it everyone is in a stock selling mood.
That hurts! But it had to happen… TomTom should sell their iPhone app as fast as possible before Google ports the Android app to iPhone. Hope at least they recover the money spent on development.
My guess is that Garmin isn’t spending much on the consumer market … I recently spent (read: wasted) $320 on a clunkly touchscreen Garmin device, and another $130 for maps … the User Experience of these devices is terrible. It’s as if they built this device for the Geo-caching community (whoever they are).
Google will probably need to work out a licensing agreement to allow offline use of maps; maybe offer some ‘for fee’ option that let’s users store the maps on their device.
Well, TomTom was really trying to maximize profits with their iPhone app pricing at $99 and the car kit for $129!
Even if Google doesn’t run them out of their business, I just love this as a consumer. The prices will definitely come down to more palatable level.
It will be a real blow when Google comes out with offline maps. It’s not like they are new to making web apps offline so it can’t be that far.
Google maps is already cacheable. It’s just not so transparent.
this is BIG. specially for us, we provide the largest local ad network in US/Canada.. as nav moves to free, we can help nav companies generate $$ by placing relevant local ads on their apps/devices like we are already doing. if you are a nav company reading this, email me at dave.smith@localadxchange.com
Not really free though right?
I mean you still need to buy a phone running Android 2.0 ~ $199 and then you need a monthly service plan ~ $100/mo.
Again – Roger, this is for existing smart phone users. Who in their right mind is going to go buy a smart phone for a single app – think about it. That isn’t even a point you make.
Eh, my android plan (t-mobile) runs at about $65. With sprint family plans you can go as low as $35.
Besides, smartphones are so useful at this point that nav is just one more reason to get them.
Yea, right. But along with it you get a phone to make calls, sms and a bunch of apps for different causes.
Exactly what I was talking about on my blog. This will happen across every industry.
Good luck if you are not a software company.
In all honestly, the TomTom stock plunge is not due to this announcement (at least: not alone), but because of the very disappointing Q3 results. More details: http://www.tradingmarkets.com/.site/news/Stock%20News/2606204/
And the google announcement a final nail!
did someone forget another big player in the gps market…. Magellan?
I was wondering about this exclusion also.
The tanking of the share prices is kind of funny, since it has been obvious for quite a while that navigation software would eventually be free. It’s too useful for too many people.
This is a great service and all and I’m always on Google’s side like so many others. But I’m starting to worry about them now. They just keep… expanding… And they barely charge for services other people make a living from.
If they can provide a service for free why shouldn’t they? Basic free market rules of competition and makes a change from Microsoft tying people into one way of using something and then charging high prices to use it. Google free stuff makes my life better it’s as simple as that and I’m not about to criticise them for doing that.
You should learn about http://en.wikipedia.org/wiki/Creative_destruction and be happy.
Single use devices are going the way of the dodo. Single use anything for that matter. My phone. My GPS. My camera. My music player. My keys. My wallet. Will ALL be in one device soon enough. Live in the now people.
Agreed, you’re the first one to mention that, but you forgot to add portable camcorders (flip/vado/zi8) to that list.
Indeed, it’s time for Google to step up and show GPS navigation companies that they have been overcharging customers and FAR beyond current speed of technology. FARRRRRR!
Knowing a person’s locations, destinations, home and work addresses, and even some habits (like what time of day he or she typically searches for restaurants)…is a VERY powerful tool for targeted advertising.
Of course all of this will probably be tied to a Google Account for added convenience and so Google can have a more complete profile of its users.
It’s fascinating and a little scary at the same time.
Now, if there was a way to store google maps locally on the cell phone, or at least sections of the maps, so the app would work without any phone service, that would be a real killer feature.
If that’s not possible, then companies like TomTom and Garmin still have a compelling product, even if it happens to be overpriced.
Gosh, google maps already caches data on the phone! Maybe just go and check it!
When you’re talking about stocks, you need to look at all the information that investors look at, not just technology.
Look at this chart: http://www.google.com/finance?q=AMS:TOM2
The Tom Tom stock plunged because of the horrible 3rd quarter results, the Google Nav info hit the market later, causing another minor impact.
market is probably overreacting.. exactly like it did to comscore last year.
Google will make an impact only with people with smart phone.
I hope Google starts selling free maps for Garmin and Tom-Tom. If I can use Linux on a PC and install Mac OS in PC why not install Google’s software on my Tom-Tom GPS. I bought a Tom-Tom GPS with outdated maps but updating the maps costs me 90$.
I want Google to stick it up to Garmin and Tom Tom for their poor customer service, overpriced underperforming products with a junk of an interface.
Even if google sells their maps to existing GPS users for 40$ I would still buy because I like google’s interface.
It is only for one phone type. Yet to see it on any major device.