Economic Crisis and GPS Monitoring and Tracking Equipment Market
Author: PhD. Professor Dorin Mitrut , Bucharest Academy of Economic Studies
Market monitoring equipment and GPS tracking, estimated at about 10,000 units this year,
will grow five times in the next two years, until 50,000 units.
Instead, the local market of GPS navigation devices has been strongly affected by financial
crisis and could record the next year an increase up to 40% compared with 2008, reaching
nearly 140,000 units sold, although initially it was estimated an advance of 200%.
In Romania were sold in 2008 approximately 100,000 GPS units, the market had a growth
rate much lower than anticipated. In this moment the penetration rate of such equipment is
about 3% to over 50% in countries of Western Europe.
JEL Classification: O3, O4, O5
1. INTRODUCTION
There are two large groups of GPS devices:
1. Navigation devices
2. Trackers
1. Navigation devices
A navigation device combines a positioning capability (such as GPS) and navigation
functions (using map, screen, computer). This system do not transmit positions.
Consumer navigation devices have gone from expensive gadgets to mainstream gear
in just three years, but Europe's largest maker is struggling.
Thus, TomTom NV – which saw earnings fall 83 percent in the first quarter – suggests
the market for stand-alone global-positioning systems is at a turning point.
For the first time is that selling prices fell, but volumes didn't improve enough to
compensate and this it's a signal the market is getting saturated.
The top four GPS makers TomTom, Garmin, Navman and Mio brands hold around an
80 percent market share, giving them scale advantages over smaller players. But competition
is coming from many directions, including big names like Nokia Corp., Sony Inc., Google
Inc. and probably Apple.
The market was 33.9 million units sold in 2007, almost triple the 11.9 million sold in
2006 and 10 percent of U.S. drivers and 20 percent of those in Europe own a navigation
device. But prices for basic stand-alone devices have fallen below $200 from $500 or more.
For example:
- TomTom has a net profit of $12 million in the first quarter of 2009, down from
$70.3 million a year earlier. Sales revenue fell 22 percent to $147 million.
- MiTAC show a 15 percent decline in the first quarter.
- Garmin, hasn't altered its sales despite price declines but Garmin benefits from
offering high-end devices for aviation and marine navigation.
By 2010, it is estimate that 500 million cell phones capable of navigation will cell
annually, compared to just 95 million pure navigation devices and 50 percent of drivers will
eventually own navigation devices, leaving plenty of room for growth in the coming three to
five years so it is possible that prices will stabilize in the current quarter, now that retailers are
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done selling excess inventory. But navigation on the phone is difficult for a number of
reasons: it cuts into battery life and you have small screens
The day strategy is to focus on the in-car market, improving basic navigation and
keeping the interface simple, on user share map corrections and possibility to collect and
distribute real-time data about traffic conditions.
The navigation device can now be produced for $80 to $100 and that leaves plenty of
room for more price cuts.
2. Trackers
A tracker device combines a positioning capability (such as GPS) and a transmission
capability (such as GPRS). Finally anyone can see the tracker’s position on an internet map.
Market monitoring equipment and GPS tracking, estimated at about 10,000 units this
year in Romania, will grow five times in the next two years, up to 50,000 units. Multinational
Recession determine to seek more self monitoring system by GPS. Car firm no longer
represents a bonus for employees in the current economic context. Distribution companies,
construction and shipping are most interested in monitoring systems. By implementing a GPS
tracking solutions for fleet management and automotive are obtained discounts of up to 20%
of fuel costs and approximately 15-25% reductions in operational costs with fleet car.
The price of a GPS location down to a minimum of 500 euros per unit in 2005, up
from around 200 euros currently at the end user.
Market GPS systems in Romania, which includes car navigation equipment and
monitoring systems, is estimated to reach 15 million euros this year. The car navigation will
reach 75,000 units by the end of the year, the equivalent of ten million euros, after estimates
Garmin representatives in Romania.
In this moment the better tracking device european maker seem to be Wavecom who
provide 70% from Romanian firms sales devices.
But all will be changed by China GPS tracker manufacturing industry: the prices will
be dawn below 100 Euro for the first time in this year. Only the additional fees keep the price
still up.
3. Tracking devices makers
China’s young GPS tracker manufacturing industry is riding on the back of a bullish
GPS market. Its strong growth potential is backed by maturing GPS technology and declining
chip cost, which speed up new product development and spawn new technologies and
applications.
There are around 50 suppliers of GPS trackers in China, including trading companies.
Only about 20 of these companies are actively engaged in the development and production of
GPS trackers. The currently small supplier population makes the line less competitive than the
popular GPS market, makers say, and helps attract new players to the fray.
The small supply yields both car and personal trackers. Many suppliers also make
GPS receivers, car alarms, parking sensors and car mp3 players. China makers hardly provide
GPS data loggers, although there are several suppliers offering GPS trackers with data
logging function. According to these makers, the combined function of tracking and data
logging may be the next product development trend in the future.
Available GPS trackers from China are designed mainly to track the elderly, the
handicapped, children and pets. Some sales and logistics companies also use personal trackers
to monitor and manage their staff and vehicles. Although vehicle tracking is still a niche
application, makers are optimistic that it will gain strong momentum in the next few years.
Makers expect that the increasing number of vehicles, particularly those with basic GPS
capabilities, will drive growth in the car GPS tracker market.
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The bulk of mainland China’s output is exported to Western Europe. North America,
which requires more advanced GPS products, remains the bulwark of Taiwan makers. In
addition to the technology threshold, many companies, in particular small players, are
reluctant to penetrate the North America market because of the additional fees required to
secure FCC certification.
3.1 Triband, quadband models on offer
GPS trackers from China support triband GSM 900MHz, 1800MHz and 1900MHz or
quadband GSM 850MHz, 900MHz, 1800MHz and 1900MHz. Models in standard rectangular
boxes as well as novelty designs are available, the last including wristwatch-type units.
Standard features include SOS emergency button, speed dial and SMS. Some GPS
trackers include built-in microphones and speakers. Several units also support GPRS.
Most GPS trackers provide realtime tracking and interference-free tracking. Some
models’ SOS function allows the unit to send out additional location information to facilitate
immediate rescue or other necessary action. These trackers can report position information
under preset frequency and work on interval-based power-saving mode. The trackers’ system
can be set through SMS and the monitor can control the on/off function.
China makers are also offering AVL trackers equipped with anti-theft alarm, which
sends alert to users through SMS or GPRS. Many of these products also feature over-speed
alarm, geofencing and low-battery indicator.
Several suppliers, such as Shenzhen Joint Technology Co. Ltd, offer car GPS tracking
monitor systems. Shenzhen Joint Technology, which works with car manufacturers, supplies
car GPS trackers that can combine cameras, temperature sensors and arithmometers. These
products can be integrated into an AVL system.
3.2 Value added, slimmer form factor sought
Makers’ product development efforts are geared toward adding more features and
developing smaller or compact designs. To improve product performance, more China
suppliers are enhancing the stability and sensitivity of their GPS trackers. Some of the new
releases integrate geofencing, data logging and assisted-GPS (A-GPS).
A-GPS is usually supported in high-end units. A-GPS technology provides an
enhanced GPS performance when retrieving GPS signals from tall buildings, or when signals
are blocked by concrete constructions, bad weather or tree shade. The ‘assistance server’
helps calculate the precise position using GPS satellites and cellular phone base stations to
pinpoint locations with an accuracy of up to 10m under optimum conditions. The other
advantages of using A-GPS include indoor positioning, fast positioning time and low power
consumption. Trackers with A-GPS are priced at about $180 each.
There are currently very few suppliers of GPS trackers with A-GPS in China. One
challenge that has kept companies from actively pursuing this segment is the need for such
products to be able to support more than one network. Some makers say that A-GPS works
better with CDMA than with GSM, especially in terms of power consumption. The majority
of GPS trackers with A-GPS are shipped overseas. Most products can be used in
administrative departments, police and judiciary systems.
In the area of product design, most companies see miniaturization exerting a strong
influence on makers’ product development roadmaps. Many suppliers will also be investing
in innovative designs in a bid to differentiate their products from the rest of the competition.
One roadblock for makers taking the miniaturization route is the higher level of R&D
capability required in order to integrate smaller GPS modules, antennas and batteries. These
components also cost higher, thereby increasing these makers’ manufacturing outlay.
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Despite the challenges, some makers have already released compact and novelty
designs such as GPS tracker watches. Shenzhen Xexun Technology Co. Ltd and Chongging
Miracle Corp. supply GPS tracker watches suitable for outdoor activities such as hiking,
biking and mountain climbing. The models are equipped with SiRF modules. Some models
are water-resistant, and can track and log movements. These units can also support time
automatic correction and smart power-saving mode.
3.3 Chipsets integrated with different solution designs
The majority of GPS trackers from China are built around the SiRFstarIII chipset,
which makers say meets their desired performance accuracy and stability. Some suppliers also
use GPS/GSM chips or modules from uNav, u-Blox, SIMCom and MTK for their GPS
trackers.
China makers can directly source GPS modules from hundreds of local suppliers of
GPS modules or solutions. Most modules from these suppliers adopt SiRF chipsets with
different solution designs. According to makers, location accuracy and power consumption
are dependent on the GPS modules.
Makers with strong R&D capability purchase chipsets and design their own PCBs.
Some suppliers directly source GPS modules from suppliers to cut production and time to
market. Others source GPS chips and GPS modules separately.
3.4 Price slide foreseen
China-made GPS trackers are priced from $100 to $140 each. Advanced models list
between $150 and $200 per unit. The GPS anntena is about $6 and GSM anntena 1$.
Makers expect that as the market for entry-level models expands, the price
competition will tighten to push down prices. Another factor that will affect prices is the
ongoing global financial crisis.
Maker’s project prices of older models will drop in the next six months. Prices of new
releases are expected to be relatively stable during the same period.
Low-end GPS trackers are quoted from $100 to $120. Most of these models adopt
SiRFstarIII and SIMCom GSM/GPRS module. Low-end trackers support GSM 900MHz,
1800MHz and 1900MHz and have more than 15m accuracy. These allow tracking through
SMS, GSM and GPRS. The devices are applied in tracking the elderly, children and pets, as
well as vehicles.
Midrange models are available for $130 to $180. In addition to basic functions, these
units feature 10m position accuracy, geofencing and low-battery alert.
High-end GPS trackers support about 5m position accuracy and A-GPS. The models
can be designed as GPS tracker watches. These are priced at $200 per unit.
4. Mobile phone and GPS tracking
The market in devices to track the physical location of children has been expanding
steadily over the past few years. Typically, equipment is promoted as offering parents the
‘peace of mind’ of knowing exactly where their children are, although in reality a device can
only tell you its own location, and not whether it is in the same place as the child being
tracked. It is hard to see how child location tracking serves any need that is not already met by
a simple mobile phone.
Until quite recently, tracking has been carried out via children’s mobile phones by
calculating the relative signal strengths at three different mobile communications masts and
‘triangulating’ the phone’s location from these. The accuracy of this system depends upon the
number of masts available, and it can be very vague in rural areas. However, developments in
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Global Positioning System (GPS) technology now allow devices to be located to within 4
metres, and within the past year GPS chips of only 2mm2 have been created. These can be
incorporated into mobile phones, or into small units that can be placed in a child’s school bag
or pocket.
The largest manufacturer of school uniforms, Trutex, is currently exploring the
possibility of producing uniforms that include GPS tracking.
The signal received from the device being tracked is superimposed on to a map that
parents can view on a webpage, or regular updates can be sent to their own mobile phones.
Additional features allow parents to set boundaries or prescribe routes, and receive an alert if
the device leaves the pre-set area.
Currently there is only a voluntary code of practice for providers of mobile phonebased location devices, developed by the mobile telephone industry following consultation
with the Home Office and the Association of Chief Police Officers (ACPO). As yet there is
no code of practice governing the tracking of children with GPS.
The code discourages the over-emphasis of ‘stranger danger’, but it remains a feature
of advertising material, giving a false impression of the real risks to children. Abduction by a
stranger remains rare. By contrast a child is over 200 times more likely to be killed or injured
when walking or cycling down the street, and yet some products are aimed at very young
children, implying that it is acceptable for them to be out alone at an age when few would be
able to cross a busy road safely. There is a risk that parents may be lulled into a false sense of
security.
The voluntary code does not include any requirement that those with access to
children’s location details have background checks carried out, and an attempt to amend the
Safeguarding Vulnerable Groups Act 2006 to cover mobile location services was resisted by
government. Also in 2006, Judy Mallaber MP introduced a Private Member’s Bill to license
mobile location services; although this was dropped before second reading it demonstrated the
growing concern about this unregulated market. More recently, Judy Mallaber secured an
adjournment debate in Westminster Hall.
The potential for misuse or corrupt disclosure of child location information presents a
significant threat to children’s safety, particularly in circumstances where it is important that a
family’s home address is not known, or where information is given to a person who may
commit offences against a child.
The need for a statutory licensing regime is urgent, both to regulate those working in
the mobile location service industry and to set down clear advertising and data security
standards.
5. Conclusions
Only the market for navigation devices is affected by economic crisis and this mainly
because it is already a mature market which has reached a very large segment of the
population.
But others GPS devices market is only the beginning, their products only now
reaching an affordable price, this price fall especially after the massive involvement of
producers in China and ongoing global financial crisis.
What is provided is a huge development of tracking devices, whether it comes to cars,
packages, people with disabilities or children.
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