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Only 5 percent of North American adults use phone-based navigation

A recent Forrester study shows that although mobile navigation is growing rapidly among U.S. consumers, they will not replace built-in vehicle systems or portable navigation devices.

Today, portable navigation device systems are the dominant providers for navigational needs. Forrester Research estimates that portable navigation devices will grow at a rate of 70 percent in 2008 to be followed by a compound annual growth rate of 33 percent from 2007 to 2013.

"I was surprised at the extent of portable navigation device dominance, especially considering how long they have been in the market versus built-in vehicle solutions," said said Forrester analyst Charles S. Golvin in his report with Michelle de Lussanet and Laura Wiramihardja.

"I was mildly surprised that the percent of consumers who own multiple solutions was not larger," he said.

Among portable navigation devices, consumers have other options for navigational systems such as built-in vehicle navigation and navigation software that runs on GPS-enabled mobile phones.

The 21 percent of North American adults who use portable navigation devices have a choice between entry-level options that cover basic needs for just over $100 and higher-end models that have more advanced features such as an MP3 player, hands-free calling via Bluetooth, and a voice interface.

Originally, built-in navigational systems were limited to high-end car brands and models. Now navigation is offered across a wide spectrum of brands, models and prices.

While portable navigation devices are the most popular navigation system, owners of navigation enabled cars are the most regular navigation users at 65 percent.

While only 5 percent of North American adults use phone-based navigation, the shift will evolve more rapidly in the years to come as the majority of mobile phones being sold in the U.S. today are GPS-enabled.

Forrester claims that this is a result of new proof that navigation delivers revenue. AT&T reported that its Navigator application generated more revenue in new sales in the first quarter of 2009 than any other application.

Despite the rapid growth on portable navigation devices in the last year, Forrester believes the growth of navigation services via mobile phone will surpass built-in navigation systems by the end of 2010 and block out the penetration of portable navigation devices by 2013.

Forrester explains that phone-based navigation is on the fast track because it appeals to younger consumers.

Generation-Y consumers are the most viable target for phone-based navigation because they are the least likely to already own a navigation-enabled device and are the most likely to already own a GPS-enabled phone.

Most obviously, phone-based navigation will always be the most convenient option as it is always in the consumer's possession.

The younger consumer audience is also a great growth opportunity simply because phone-based navigation offers more pricing options, which allows consumers to manage the cost of navigation in accordance with their needs and usage.

For non-phone-based navigation system providers, Forrester suggests that auto manufactures provide vehicles designed to connect the display and audio systems of the car with the mobile phone.

This will address the greatest fault in mobile navigation which is a quickly drained phone battery due to constantly leaving the display at full power.

On the other hand, portable navigation device providers should target owners of built-in or phone-based navigation systems who are looking for something for a family member or a higher-quality navigational experience.

"The primary implication this study has on mobile marketing is underscoring the fact that marketing messages in mobile are much more valuable when context-relevant, and location is a key element of context," Mr. Golvin said.

"Navigation applications offer significant opportunities for brands to make themselves context relevant, and when those navigation applications are connected the opportunity is even greater," he said.