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GPS nav unit pricing hit $50 on Black Friday

Posted on Saturday, December 18 2010 @ 14:30:00 CET by

iSuppli reports prices of GPS navigation units hit rock bottom on Black Friday as pricing dropped as low as $50 for no-name brands:
Black Friday ended as a shootout for the two leading suppliers of portable navigation devices (PND) in the U.S. market, as Garmin and TomTom fought to wrest precious purchasing dollars away from consumers at the same time that PND prices hit rock bottom.

With some 40 percent of the sales of portable navigation devices (PND) coming during the fourth quarter, Black Friday discounts are a significant contributing factor to PND yearly revenue. Approximately 25 retailers across the nation sold PNDs this year from more than 10 brands, with name-brand, Tier 1 PND models offered for as low as $50.

While the Black Friday bloodbath boded well for Garmin and TomTom, their gain was made at the expense of Magellan and other Tier 2 players.

Until 2008, Tier 2’s and no-name brand models used to lead in aggressive price drops, with vendors usually targeting less savvy consumers shopping for cheap models at non-CE stores such as Pep Boys, Walgreens, Kmart and 6Ave. However, very few no-name models led the pricing war in 2009, which instead saw TomTom’s entry model—introduced at Wal-Mart—as the cheapest PND overall, a definite loss leader that marked the first time a brand-name model offered the lowest-priced deal.

And because most retailers sold more Garmin and TomTom models than any other brands, the discount rates were also stretched out, ranging from 25 percent to 70 percent, with retailers being somewhat more aggressive in discounting Garmin models.

This year, however, Walmart and TomTom did not change pricing, and honors for the lowest-priced PND model went to Nextar’s X3, sold by AJWright at $50. Discounted at more than 55 percent, the X3 is a mid-entry-level PND featuring a 3.5-inch screen, MP3 player, JPEG viewer and text to speech (TTS). It does not feature any wireless connectivity, such as Bluetooth or GPRS for two-way connected content services.

Overall, iSuppli could not find many models from Tier 2 companies such as Rightway, Maylong, Sylvania and Nextar, even though their PND discounted pricing in excess of 50 percent was more aggressive than offerings from last year.

Other Notables
Best Buy kicked off a post-Thanksgiving sale with a heavy emphasis on iPods. A Best Buy Online-only deal offered its in-house PND brand Insignia NS-NAV02R GPS for free with the purchase of the fourth-generation iPod Touch 8GB, 32GB or 64GB.

iSuppli believes that such a strategy is disruptive for the PND industry, undermining the value of the specialty devices. It is not hard to speculate Best Buy’s intentions with the deal, given that both the PND and MP3 player category represented by the iPod are not selling well at the retailer.

For its part, Amazon.com listed 11 PNDs for less than $100. Interestingly enough, the GPS section on the company’s website helped potential PND buyers gauge the features of greatest concern to consumers, such as Lifetime Traffic, Map Updates and Large Screens. These features are what major PND vendors are pushing in order to survive the competition created by other navigation form factors, such as smart phone/tablet navigation apps and low-cost in-vehicle navigation systems.

Overall, Black Friday remains geared toward entry-to-mid level PND sales, as iSuppli could not find any connected PNDs. Meanwhile, volume PND players such as TomTom and Garmin are already moving into the content and services business to offset PND revenue losses. Perhaps for 2011 Black Friday sales, discounts on TomTom LIVE Services subscription might become available.

Meanwhile, smart phone-based navigation app vendors, or players in the new battleground for navigation applications, also had significant promotional deals.



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