Garmin slashes app pricing to better compete against Google
June 18, 2014
Garmin's viago app
Garmin Ltd.’s unveiling of a new $1.99 mobile navigation application is a move to prevent further erosion of its relevance as customers embrace smartphone navigation apps.
The iPhone and Android-supported víago app launched Tuesday gives drivers access to worldwide maps with turn-by turn voice directions as well as lane assistance, junction views, speed limits, weather and traffic. But the availability of powerful and popular free apps such as Google Maps means the Olathe, KS maker of premium global positioning system devices could still face challenges as it attempts to win back former customers lost to rivals with free navigation smartphone apps.
“The model for monetization has to be freemium – give away the basic version of the app for free, or for a low price in Garmin’s case, and make money through in-app upgrades,” said Nitesh Patel, director for wireless media at Strategy Analytics in MA.
“Or, through advertising, which to date remains in its infancy.”
Winning back following
By pricing the app to be competitive with Google’s popular free navigation app, Garmin, whose apps can sell for more than $30, hopes to attract new app customers and win back former GPS device customers lost to rivals with free navigation smartphone apps.
“The idea behind the viago app is to give users the choice to pick the features they really need and only pay for those as opposed to having to purchase a full featured app at a higher price,” said Johan-Till Broer, Garmin public relations manager.
“We’ve been competing in the navigation app space for several years by offering premium navigation apps that offer driving-specific features that aren’t available from free apps,” he said. “The new Garmin viago app provides an even better experience by adding new features and a redesigned user interface.”
Despite the availability of free apps offering features such as lane assistance, Garmin has continued to price its well-known StreetPilot GPS system at premium prices, even after making parts of its available in apps. The U.S. version of its StreetPilot Onboard app sells for $49.99.
The low-priced viago app allows consumers to buy just the features and functionality they need, offering a lower-risk option for consumers who do not want to spend more than $30 on an app, according to Peter Trujillo, who follows the mobile-device industry for market-research firm JD Power and Associates in Westlake, CA.
Garmin has explored low-price app territory before. Its StreetPilot on Demand app sells for 99 cents. But viago boasts a completely redesigned user interface and offers more advanced features.
A big selling point could be the app’s ability to let users purchase onboard maps that can be downloaded to the phone, allowing navigation without a data connection. This had previously only been available in Garmin’s higher-priced premium apps, the company said.
The app does not signify a change in direction for Garmin, the company said, emphasizing that it has offered mobile navigation apps for several years.
But some observers say winning back former customers lost to smartphone apps will be no cinch for Garmin, whose navigation device business still accounts for a big part of its consumer automotive business.
“Despite its brand and even at this low price point Garmin won’t be able to challenge free and integrated navigation experiences like Google Maps or HERE,” Mr. Patel said.
“Discontent around the iPhone navigation application may create some opportunities on that platform, but those users could choose from competing free options.”
“In my view this is new price point is about shifting from an un-competitive price point to a new business model that will enable it to grow users and monetize through in-app or advertising down the line.”
Michael Barris is staff reporter on Mobile Marketer, New York