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Nav system price drop to hurt car infotainment market

Posted: 16 Jun 2010 ?? ?Print Version ?Bookmark and Share

Keywords:car infotainment? navigation? automotive? GPS?

The automotive infotainment market, which includes in-vehicle navigation, audio, video and Internet, will decline to $24.8 billion worldwide in 2015 from more than $29.5 billion in 2010. This is according to a new study by ABI Research which forecasts that price erosion on in-vehicle navigation systems will hurt the category just as other technologies are beginning to grow to support it.

In a new study, "Automotive Infotainment: Navigation Systems, Satellite and Digital Radio, Video, In-Car Computing and Digital Content," ABI Research anticipates that automotive infotainment revenue as a whole will see a CAGR of -3.4% from 2010 to 2015, mainly due to revenue declines associated with built-in in-vehicle navigation systems.

Says research director Larry Fisher, "Pressure from the aftermarket, and from free or low-cost applications available via smart phone handsets, will drive down ASPs for GPS/navigation systems so severely that, while the number of vehicles equipped with such systems will double worldwide over the forecast period, revenues for those systems will decline by two-thirds."

Fisher further noted, "If you exclude in-vehicle navigation, the worldwide market for automotive infotainment will actually grow at the very healthy CAGR of 20% over the forecast period."

Automotive infotainment is beginning to flourish, thanks to standards that ensure these systems will not be obsolete within a few years, since software can be updated, and hardware can be upgraded. Standardized infotainment systems are drawing the attention of third-party developers eager to write software with a potential sales base of millions of drivers. Third-party applications hold the promise of licensing revenue, and some ongoing service revenue could also be generated by third-party Internet or other services.

Although automotive infotainment is on the cusp of attaining mass-market status, OEMs and aftermarket vendors face a number of challenges to sustained revenue growth. For one, consumers may like premium audio and video content, but many will be reluctant to pay high subscription fees when free alternatives are common. On top of this, the sector also faces a potential threat as legislators ponder concerns about driver distraction.

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