Smartphones prove to be destiny of navigation manufacturers

The mobile carrier SK Telecom introduced the free navigation application T Map for its smartphone users in May 2010. T Map used to be a paid service called NATE Drive that shows shortcuts based on real-time traffic information. But this was because many smartphone users left the mobile carrier for KT to use iPhones from late 2009. Against this backdrop, SK Telecom decided to provide the useful real-time traffic service free as a desperate attempt to secure customers.

Instead of curbing the rush for the subscription to iPhone use at KT, the free navigation service by SK Telecom dealt a big blow to the car navigation industry, which had nothing to do with mobile communications. ThinkWare, the No. 1 navigation manufacturer at the time, began to see its revenue began decreasing since then. As drivers use smartphones as navigation equipment instead of purchasing navigation gadgets, ThinkWare’s annual sales plunged from more than 200 billion won (178 million U.S. dollars) in 2010 to 113.1 billion won (101 million dollars) in 2012. The company`s operating profit over the same period also nosedived from 11.3 percent to 2.8 percent.

But fortunately, ThinkWare could find a way to revive itself in the car black box market. Entry barriers of the automotive black box market are relatively low because of simple technologies required, such as the recording and playing of video. What matters in the market was people’s trust. The company’s navigation brand iNavy, the most sold navigation brand in Korea, helped the company attain people’s trust. While the company’s navigation sales cut in half, the sales of car black box have jumped 18 folds.

Staying lucrative in the two red oceans of navigation and black box, however, is no easy for the company due to fierce competition. Much to everyone’s surprise, the company found its way to survive in the smartphone market, which once pushed the company to the brink. ThinkWare had its navigation application embedded in Samsung’s tablet computer Galaxy Tab launched in September 2010. Later, the company provided the apps for Galaxy S2 and Galaxy Note. The iNavy app provides services free for the first one year and begins to charge the users. In this way, the company has been raising annual revenues over 8 billion won (7 million dollars) from the navigation software.

“The sales amount from the navigation app is not big. But considering the low cost, the app contributes greatly to the company’s profits.” ThinkWare’s operation profit of last year was a meager 5.1 billion won (4.5 million dollars), said Kwon Hyeon-woong, the head of the company’s public relations team. “We expect that the markets of car black box and navigation will be saturated sooner or later. So now we are also developing tablet PCs.” The company recently signed a contract with the Turkish government to provide 60,000 units of tablet PCs.