TomTom’s marketing machine was in overdrive last week with announcements of a new OEM relationship (Mazda) and advances with existing partners (Toyota, Renault), enhancements to its (European) market-leading traffic solution (HD Traffic) and a traffic manifesto. But undoing all that positive spin was the note that the company still wants to charge about $50/year for its Live Services. It looks like TomTom didn’t get the latest email about automotive value propositions. As connectivity comes to more vehicles, drivers (and passengers) will get more of their content and services from the “cloud.” What this means is that car makers will increasingly have in place systems for sending, receiving, processing and managing all types of vehicle data – the “back end.” (This is not unlike what is happening at your average NASCAR or Formula One event every weekend – without the parking space availability and Internet radio.) The value of this data is manifest to the car makers for better understanding the performance of their vehicles on the road as well as better understanding how consumers use and abuse their cars. The implications for cost avoidance, warranty and recall management are in the millions of dollars of savings. There is no immediate or obvious benefit to the driver. For this reason, this kind of vehicle connectivity ought to be free. (On the other hand, OnStar and others have demonstrated that people will pay for safety and security.) As more drivers shift to smartphones (with mandatory data plans) with access to a wide range of content and services, they will be less likely to pay for any service from the car (or PND) maker that is available for free (or for which they are already paying) via their mobile phone. So how is the industry (and TomTom) going to monetize all this connectivity? Enter the back end value proposition. Auto makers and Tier Ones have gotten the message and recognize that driver and passenger eyeballs and “click-throughs” have value. A driver asking for directions to a restaurant or movie has economic value. A system that knows the location of the driver has value. Beyond this, a system that is able to provide a broader “cloud” perspective of all location-related activity – including everything from prosaic traffic information to “heat” maps of gatherings of people, weather, etc. – has other value-add implications for drivers, passengers and roadway systems and public transportation overall. But in the short-term, vehicle related information for diagnostics, safety and entertainment take priority. Continental, Harman, Visteon, Delphi and Pioneer clearly understand this. All of these companies have introduced systems or platforms that seek to leverage vehicle location information for commercial opportunities. Even Best Buy’s connected PND delivered sponsored links in its Google Search. Unfortunately, Tier Ones face an uphill struggle in trying to get a piece of this action. The telematics eco-system consists mainly of a telematics service provider (ie. ATX), a carrier (ie. Sprint or Verizon) and a system integrator (ie. TCS). Each of these operators is interested in the other’s business – with the possible exception of the call center. (No one wants the call center hot potato – too much cost.) While the call center tends to be shunned, the data back end tends to be either misunderstood or underestimated. But the back end system is rapidly becoming the backbone of the system altering the competitive landscape. The power and influence of back end systems is visible to the consumer in the growing variety of free content and services via smartphones. Google probably has the largest back end system currently influencing developments in the automotive market. With its free navigation, traffic and search and an open source operating system, Google has rattled the industry mightily over the past two years. Carriers, meanwhile, are trying to fight there way in – not content to be simply white label suppliers of bandwidth. Among the carriers sniffing around the telematics back end opportunity are Verizon, Sprint, T-Mobile, Telenor, Orange, AT&T Mobility, Vodafone and Ericsson. All of these companies recognize that their servers are as valuable as their networks. Some of these companies fancy themselves Tier One players. At least three handset makers have the potential to rise to the Google challenge: Nokia, Apple and RIM. Like Google, Nokia is offering free navigation while also seeding the market with open source development tools (Qt), operating system softare (MeeGo) and smartphone connectivity technology (Terminal Mode). But Nokia remains ambivalent about the automotive opportunity. MeeGo is not ready for market and Ovi has not been designed for automotive opportunities. RIM brings a unique value proposition combining its smartphone system experience with its newly acquired QNX automotive expertise. RIM represents the most immediate threat to Google’s potential dominance in the automotive market because of its potential to deploy navigation and traffic applications (based on handset probe data) and its ability to monitor, manage and mine its network data traffic. Apple’s strength lies in its secure systems for managing commerce for downloading applications and enabling the purchase of content. For these reasons, Apple and RIM both have the scope and scale to add value to automotive opportunities. The massive giveaway of content and services by both Google and Nokia is a setup for capturing click-through traffic and back end processing opportunities for creating metrics and analytic output. Google already has the analytic tools in place, unlike Nokia. The current landscape for back end services is highly fragmented and includes companies such as TeleNav, Airbiquity, Hitachi, TeleCommunications Systems, Hughes Telematics, WirelessCar, Oracle and IBM, along with the previously mentioned wireless carriers, RIM and Apple. (Strangely, Microsoft seems to have disqualified itself – having disbanded its automotive business unit. The original vision defined by Microsoft at multiple industry events included integrating more and more Microsoft solutions such as Bing, Tellme, and Silverlight into automotive platforms, but the complete vision – including back end services – never materialized. The one exception to this no-show for Microsoft are the company's ongoing efforts to capitalize on the Bing search engine.) The value proposition of back end service providers revolves around secure management and processing of vehicle and driver data for applications ranging from vehicle performance and safety to content and infotainment and, ultimately, commerce opportunities. Neither OEMs nor Tier Ones are equipped to manage this opportunity and traditional telematics providers lack the scale. The lack of scale is one reason Airbiquity has partnered with Hitachi to service Nissan’s connectivity needs around the world. It is likely that companies such as Hughes and TeleNav will seek partnerships with larger integrators such as IBM or Oracle for the same reason. Nokia, like RIM, already has the scope and scale and like Apple already has the commerce platform (Ovi) but, unlike Apple, has done little beyond the introduction of terminal mode to optimize its offerings for automotive. TomTom is another player in need of a partner to provide the scope and scale necessary to compete in the connected space. The larger organizations that are able to monetize the connectivity proposition will force out smaller players dependent on subscription revenue. If TomTom can enhance its navigation and infotainment platform to include safety and security telematics, it will greatly improve its value proposition and the likelihood of building a devoted subscriber base. Conclusion Google and RIM are best positioned to leverage the back end data processing opportunity presented by the automotive industry. Google faces trepidation among potential OEM customers who are suspicious of the company’s motives and objectives. Google’s failure to validate its Android OS for automotive applications is another stumbling block. Nokia has discrete elements of a solution in place but so far lacks the commitment and execution to challenge either Google or RIM. Apple is a wild card player in a market that remains fragmented with the door open to new entrants. Microsoft's Bing search engine is another contender gaining traction, but, in the end, Microsoft is more of an arms supplier to the contesting parties. Winners in the battle for the back end will be those companies able to bring security and state-of-the-art analytics and commerce management to the automotive industry. Google knows analytics. RIM knows security and network management. It remains to be seen whether Nokia or some dark horse will step forward to challenge these two dominant players, but the race is on. Additional Insight: http://bit.ly/c0OLhT - Consumer Implications for Smartphone-Vehicle Connectivity  - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c1nvTq - Consumer Interest High for Connected Safety and Security Services - Chris Schreiner - Automotive Consumer Insights http://bit.ly/aGJHDj - Smartphone Market Evolution and the Automotive Opportunity Implications -Fitzgerald - Automotive Multimedia & Communications

A grand experiment is unfolding in the traffic reporting industry around the simultaneous confrontation between and combination of GPS probe and handset signaling data for traffic flow analysis. Both technologies offer the promise of transforming traffic data from an annoying and often disappointing proposition to a more precise and satisfactory experience. But push is about to come to shove in North America – with three pending OEM RFQs in play. The results of these OEM evaluations will likely have a global impact on the traffic data processing industry. To recap, current traffic data consists of: 1. GPS-based fleet data – derived mainly but not exclusively from commercial vehicles 2. Public data – loop sensors and other traffic tracking systems installed and managed mainly by public authorities 3. “Journalistic” data – incident inputs from emergency responders and private sources GPS probe and cellular hand-off data is, in essence, a fourth layer that is of increasing importance to traffic reporting and interpreting systems. The other key element, of course, is the secret sauce added by the aggregators and processors of this data. The aggregators and processors are of several types including those that aggregate a single type of data, such as AirSage or IntelliOne that process cellular handoff data, or that combine several different types of data, such as Inrix or ITIS Holdings, or that provide a system or a tool for processing or for publishing multiple data feeds, such as MILE (MobileInfo.Life Europe) Traffic and Travel, Gewi or PTV. Inrix is a fourth type of provider in offering a platform for both service and content aggregation – including traffic. Inrix has also been a pioneer, along with Navteq’s Traffic.com, in combining multiple real-time and historical traffic data into a predictive traffic model. This strategy has been adopted by others, most notably TomTom. MILE Traffic and Travel is unique for its model of licensing its data processing technology. TomTom is also best known for its pioneering work in integrating both cellular hand-off data (from Vodafone) and GPS probe data (from its Live Service subscribers). TomTom’s success in turning cellular hand-off data into a compelling solution in mobile devices has been an inspiration for both the emerging GPS probe market players (TCS, RIM, Google, Nokia Navteq, etc.) and the cellular hand-off companies. (ITIS claims to be the first to achieve this integration in a commercial solution.) The impending integration of both GPS probe data and cellular handoff data is a test for the industry to see if it can finally get the traffic data solution right. At stake are the hearts, minds and wallets of hundreds of millions of drivers using mobile devices and embedded navigation systems to seek out the most efficient means of getting from point A to point B. GPS probe data is renowned for its accuracy and increasing pervasiveness, as public authorities in multiple geographies have begun requiring GPS technology on handsets for emergency response purposes. The problem with GPS, though, is its impact of device power consumption. Because of this, many users choose to turn their GPS signals off when not in use. In contrast, cellular hand-off data is truly pervasive. While more difficult to interpret and notorious for the incidence of false positives, cellular hand-off data is unmatched for the sheer volume of data generated. For this reason, companies playing the cellular hand-off game, such as TomTom, MILE Traffic and Travel and AirSage, have an edge in the next wave of traffic data solutions. The only implemented solutions thus far have been TomTom’s industry-leading HD Traffic offering in Europe and Westwood One’s more limited use of AirSage data as an enhancement to its own traffic reporting products. AirSage is unique in its recent successful efforts to bring together data from multiple carriers. The company recently added Verizon to its existing Sprint relationship and is poised to deliver the first multi-carrier solution for North America. AirSage and other North American players have long been delayed in their efforts to deliver a cellular hand-off solution in North America due to the more heterogeneous carrier networks. The good news for these companies, though, is there is a significant business in logistics to be derived from the location data (for shipping, traffic management, store and cell tower locatin selection) and location-based advertising solutions are also beginning to emerge. The turning point for the industry likely lies in pending North American RFQs at BMW, Toyota and OnStar. From luxury vehicles to mass market movers, drivers have let car makers know that the current crop of traffic solutions are not cutting it. The information on the display does not correspond with the events unfolding in front of the windshield. The outcome of these OEM evaluations will likely determine the direction of traffic data processing for years to come. Additional Insights: http://bit.ly/bMeg36 - Global Mobile Handset Navigation Forecast 2004-2014 – Nitesh Patel - Navigation and Location Opportunities http://bit.ly/aoQdpd - North America Mobile Handset Navigation Forecast 2004-2014 – Nitesh Patel – Wireless Media Strategies http://bit.ly/aHhWeV - Nokia & Google Shake Up $3.8 B Handset Navigation Market - Nitesh Patel - Wireless Media Strategies http://bit.ly/cc6O9K - PND Owners Unlikely to Discontinue Using Their Device - Chris Schreiner - Automotive Consumer Insights http://bit.ly/c5f65I - Automotive and Portable Navigation Market Forecast 2008-2016 - Joanne Blight - Automotive Multimedia and Communications Systems http://bit.ly/b5W8ZS - Nokia and RIM Push Into Automotive as ‘Apps’ Competition Mounts - Joanne Blight - Automotive Multimedia and Communications Systems http://bit.ly/9NoM13 - From Probes to Crowd to Community to Ads – Traffic Data Evolving Rapidly - Roger Lanctot - blog - Global Automotive Practice

Telmap has flipped the switch on its direct to consumer smartphone navigation strategy shifting entirely to the white label approach the company has pursued for many years with operators. The company expects the new positioning to give it a competitive edge vis a vis Nokia and Google and vault it into a global leadership position.

 

Prospects were looking bleak for Telmap when industry heavyweights Google and Nokia began offering free navigation applications for smartphones. Google made the application available as a download for iPhones and, more recently, Android-based phones, while Nokia recently began including navigation on its handsets.

 

The Telmap strategy overturns both of these approaches by working through wireless operators, a strategy pursued by both TeleNav and Networks in Motion (now part of TeleCommunications Systems) in the U.S. But Telmap is taking the approach on the road with partners throughout Europe, Asia and Latin America.

 

Telmap is taking a three pronged approach providing:

 

1)      An off-board application with local search and navigation that can function with all operating systems;

2)      A location platform with APIs to facilitate the distribution of any and all location applictions;

3)      A Web-based application that allows for desktop management of location applications and synchronization with the phone.

 

The initial launch of the new positioning will manifest in O2 Germany delivering 30 handsets by the end of May all equipped with the Telmap technology. In fact, Telmap says it is already seeing 500-1000 new activations per day based on the new approach.

 

The white label is ideally suited to the shift, in Europe, to a bundled model for applications and services. Navigation is increasingly being provided at no charge, so the model has shifted to enabling different billing and payment methods for selling enhanced content and applications.

 

The white label strategy gives Telmap a strategic edge because it allows the operators to introduce a cross-platform solution that can be advertised and promoted across their entire handset line-up regardless of handset supplier or operating system. Telmap hopes operator support will help juice its subscriber base, which currently stands at approximately 1M in Europe and 1.5M globally.

 

And operators are keenly interested in exploiting the location opportunity because, thus far, the margins have been quite high, according to Telmap executives. To keep that revenue flowing, Telmap is enabling integration with ultra local content and services such as Coyote safety camera apps in France and road charging services in the U.K.

 

Additionally, the free Telmap application allows for premium upsells and a variety of booking and payment methods along with advertising. And by using the same platform across the entire line, operators retain control and customers can communicate and network with one another.

 

The gamble for Telmap is that the operator-centric approach will trump the Nokia handset-side approach and the Google app-store strategy. The concept of leveraging operator advertising and promotional support is a powerful one. Google tried to take its Nexus One handset directly to the market only to knuckle under to operators in the past week.

 

The strength of the strategy is reflected in the tight relationships between Networks in Motion/Verizon and TeleNav and AT&T/T-Mobile/Sprint in the U.S. These partners are working on additional enhancements to the navigation and location platform which is producing millions of subscribers and hundreds of millions in revenue.

 

From a branding standpoint, location applications will come to define and differentiate the operators and a cross-platform solution makes it much easier to leverage and control. The attraction of the Telmap approach is already apparent as the company touts among its operator supporters: Vodafone, O2 Telefonica, Orange Group, Singtel Group, IUSACell, Pelephone, Cellcom, Mobilcom, and Boost Mobile, among others.

 

Of course, tiny Telmap is taking on industry giants in Nokia and Google and regardless of the strength of its strategy lacks the brand awareness and marketing clout of either of these companies. But the shift away from a consumer direct strategy to white label is probably the last best chance for Telmap to move into the front rank of LBS market leaders. And the company is investing heavily in ultra-local tie ins across the many countries around the world where it competes.

 

Wild cards remain in the battle for dominance of the location aware marketplace. One such wild card is the creation of superior traffic information from probe data. Google’s initial efforts to convert Droid phone user data is beginning to get attention and RIM (following its QNX acquisition) is likely to be the next company to bring a probe-enhanced traffic service to the market. Nokia (Navteq) and Apple will likely be next leaving Telmap to ponder whether it can convert its operator relationships into a superior traffic solution of its own.

 

With the smartphone navigation market ruled as it is by a confluence of advancing technology and consumer preferences, only two things are certain: change and Telmap’s determination not to raise the white flag.

 

Further Insight:

 

http://bit.ly/cMw4f1 - Solid Q4 for PNDs, but 'Free' Navigation is Shaking Up Monetisation - John Canali – Automotive Multimedia and Communication Service

 

http://bit.ly/bMeg36 - Global Mobile Handset Navigation Forecast 2004-2014 - Nitesh Patel – Navigation and Location Opportunities

 

http://bit.ly/8Yo4U6 - Nokia & Google Shake Up $3.8 B Handset Navigation Market - Nitesh Patel – Navigation and Location Opportunities

Lately industry observers have been predicting the arrival of the automotive app store along the lines of the Apple model. The predictions seem to suggest that this is a simple and obvious proposition with a single business model and development path. In fact, it is a complex and evolving proposition with no single solution or magic bullet. Ford Motor Company and Mercedes-Benz have already learned how challenging this proposition really is. Both organizations have successfully developed – in-house – their own applications – an expensive, labor intensive, and time consuming proposition. But application development is only part of the challenge. Here is the complete list: 1.         Platform selection – Which handsets will be supported? Which carriers will be partners? Which operating systems (versions!) will be adopted? 2.         App store selection – Which app-store(s) will be supported or used? Carrier? Handset maker? Third-party? Own branded? 3.         Pricing model – Free? Free for limited time? Free with premium add-ons? Free with paid premium version? Subscription (monthly, annual, lifetime)? Pay per use? Sponsored or ad-supported? 4.         Application acquisition – Download? Activate on-board app? Access cloud-based service? Access device-based app? Dealer install? 5.         Handling of upates – Automatic wireless? Customer self-service with USB drive or direct connection of handset? Dealer? Recently announcing the sale of its second million cars equipped with Sync, Ford appears to be having the most success, early on, in the automotive app business. Ford appears to prefer to distribute its Sync application directly from its www.syncmyride.com Website. This makes sense since some of the applications, such as 911 Assist, require a dealer installation. The Website also provides detailed phone and media device compatibility information along with software upgrade information, application demos and FAQs. Most of the Sync services are available for free for the first three years, and some require a data plan. The data plan requirement reflects an industry-wide inclination to leave data charges to the customer. The provision of free applications to Ford customers reflects a market decision to leverage Sync to sell more Fords – a game plan torn straight out of Apple’s playbook. Based on Strategy Analytics analysis of the Apple business model, the app store is positioned either as a loss-leader or breakeven proposition. The primary purpose of the Apple app store is to sell more iPhones, iPods, iTouches and, now, iPads. Similarly, Sync is intended to sell Fords and, judging from the fact that 2M Fords have been sold with Sync the strategy appears to have traction with consumers. The Sync proposition also has traction with dealers and fits well with the existing Sirius Travel Link services both of which are enabled by Nuance speech recognition. Both offer an effective customer demo. At Mercedes-Benz, the mobile application is called mbrace, which is also the name of the company’s new telematics service, which replaces Tele Aid. While Ford’s Bluetooth-enabled application works with most Bluetooth-enabled phones, mbrace is compatible with a narrow list of iPhones (OS 2.2.1 or later) and Blackberries (4.5 or later) including GPS models for customers that want to access location-aware applications. The mbrace application can be obtained from Apple’s iTunes store or Blackberry App World and the only carriers that are supported today are AT&T and Verizon Wireless. The mbrace service is $240/year or $480/year (@$20/month) for mbrace Plus which includes concierge and other location-aware services. Of course, Mercedes could always vary this pricing depending on its marketing objectives. Mercedes has not yet positioned mbrace as a service offering designed to sell more cars. The immediate purpose of mbrace was to replace the existing telematics service provider and create a mobile phone integration platform. And since Mercedes is also focused on providing premium telematics services first, as opposed to simple infotainment tasks, the company does recommend that the customer have an unlimited data plan. This is not a big deal considering most smartphone customers are required to purchase data plans. Like Ford, Mercedes is interested in rolling out additional applications from third parties on a regular basis. Ford has gotten a head start on this effort with the release of its software developer kit. For now, Mercedes has been content to continue to do most of its development in house. The latest application from Mercedes, also for the iPhone, is intended solely for the Smart vehicle line and includes a full suite of infotainment applications. There is no announced plan to bring this application, which works with a separately purchased cradle, to Mercedes-branded vehicles. The real challenge for car makers is that the mobile market is a moving target. Market leadership between handset makers, operating system suppliers and carriers is a dynamic environment ruled by supplier innovation and consumer preferences. Ford’s choice of a combined Bluetooth and USB interface to enable Sync has made it easier to keep pace with the changing array of available phones. But testing for compatibility remains a substantial undertaking. (The current Ford Sync compatibility chart is nine pages long.) Apple’s influence on this market has been to add a couple of layers of complexity or, to be charitable, opportunity. By opening up its app store to third-party developers, Apple signaled a key turning point in the app store model. Developers are now able to choose the platforms they want to develop for based on criteria such as size of addressable market, amount of revenue share, variety of available revenue models, and ease of doing business. With its rapid rate of customer acquisition and the flexibility of its application revenue models, Apple has raced ahead of competing app stores in attracting application developers and applications. (Apple has even gone so far as to provide a tool for developers to target pricing tiers to specific date triggers: http://bit.ly/a4ETQw.) Strategy Analytics has estimates of revenue shares (available to clients) with the caveat that these percentages vary and change. Ford’s decision to offer Sync for free for an extended period of time along with additional free applications reflects the desire to build an attractive addressable market. While handset makers such as Nokia (with its Ovi store) and carriers can target massive user populations, car makers are more challenged in rapidly building a sufficiently large user community. Ford has a significant jump on competitors with its 2M unit addressable market. App stores are coming to the automotive market, but the path will be a crooked and expensive one. There is no single model that will work for every player. Ford and Mercedes are pursuing similar paths with completely different approaches. Every car maker will have to find its own way. Two things are clear: The investment in an automotive application store is a multimillion dollar proposition involving significant and ongoing costs in development, support and marketing. The potential upside, though, is the opportunity to redefine a brand and increase sales and market share. Ford’s apparent success to date is a demonstration that at least one version of the Apple model can work in the automotive market. Further Insights: Wireless Media Strategies: How Apple Changed the Market for Mobile Applications – David MacQueen – http://bit.ly/9KSuVL Automotive Bluetooth: Profile Strategy Key to Infotainment Success – Mark Fitzgerald – http://bit.ly/9qEXbU CES 2010: The Arrival of Converged Automotive Multimedia Products – John Canali – http://bit.ly/9gp4yo

QNX Software Systems has more or less quietly taken control of the luxury car market for embedded infotainment operating system software and, increasingly, application-level software in the head unit as well. The month-long, nationwide tour coordinated with Alcatel-Lucent to show off the now-famous LTE-enabled Toyota Prius has sent a clear message that QNX has tomorrow's automotive infotainment solutions ready today. The LTE implementation shows QNX at the peak of its game. In fact, QNX and Microsoft virtually pushed VxWorks out of the automotive operating system market and the two are virtually unchallenged aside from M-itron, which is dominant among Asian OEMs. Could QNX be poised for further gains or is the company's position more vulnerable than it seems? The demonstration of the LTE car, most recently featured at the Rock Financial Showplace in Novi, Mich., reveals an in-dash system with two front-seat screens along with back-of-headrest screens for rearseat entertainment. As a concept demonstration, the vehicle of course violates existing limitations on frontseat, in-dash video, but the point is that virtually any kind of audio, video or game content is available via any screen each of which can be personalized to the passenger in that position. The basic options displayed in the demos are Games, Communications, Internet,  Entertainment, Vehicle and Navigation. Of course, these six choices could be whatever the developer prefers and users are able to customize the sub-directories as they would radio stations. For example, within Internet the options include: Chumby, Browser, Fanbase, Home Control, Internet Video, Kabillion, Weather, YouTube, QStore, Pandora and Local Search. A similar rich mix of options is available under vehicle where QNX has realized the vision of the virtual user manual with vehicle schematics tied to on-board sensors. And, of course, QNX has enabled several on-board application stores. There are several implications to the QNX design. First of all, the system is a cloud-ready solution. A vehicle equipped with the QNX software is location aware, capable of tapping into the Internet for its information needs or the information needs of the driver and/or connecting with the driver's phone to access contact or scheduling information. Secondly, the QNX system shows how comprehensive connectivity almost completely obviates the need for a call-center-type telematics service provider. The driver can access almost anything he or she needs via voice commands and the vehicle, with appropriate software enhancement, is capable of anticipating or responding to most requirements. Lastly, the LTE demonstration is a warning to auto makers that emerging network deployments may be closer than they appear in their rearview mirror. Verizon says that by 2013 its LTE network deployment will be equivalent to its 2009 3G deployment - ie. nearly ubiquitous. Those modules may be expensive, but they're coming fast and those prices will fall correspondingly. Enabling this level of functionality is QNX's so-called abstraction layer of software for Alarms, Audio, SOS, Phone, GPS, Net and CAN. This abstraction layer acts as an interface between the embedded systems and the application layer. The applications "subscribe" to the objects in the abstraction layer which receive their updates from the embedded software. The only bad news for QNX is that this LTE solution is ill-suited for the volume segment of the automotive market. While QNX has taken charge of the high end of the market, the high end of the market is characterized by low margins and low volumes. Microsoft, another contender for luxury segment business, has made a name for its self in the volume segment of the market where both margins and volumes are superior. The question facing QNX is whether it can leverage its high-end success with mass market solutions. Given the fact that it is already well positioned with relationships with key players such as Hyundai and Volkswagen prospects are positive. But with a swarm of small cars hitting the market it is likely that Microsoft is better positioned to benefit the most from emerging opportunities. In spite of the elegance of the LTE showcase, QNX is an industry shark that needs to find a way to swim like a minnows. If there is a segment(s) on the rise it is A/B.

TeleCommunication Systems (TCS) has announced that it has entered into a definitive merger agreement to acquire Networks In Motion for an aggregate of $170M. The merger consideration will be paid in a combination of cash, TCS common stock and promissory notes. Networks In Motion's Board of Directors has unanimously adopted the merger agreement and recommended its approval by Networks In Motion's stockholders. The acquisition accelerates TCS' position in enabling mobile operators to offer enhanced location-based data services. The move by TCS reflects the relatively quiet success achieved by Networks in Motion and TeleNav and a couple of other companies in building a highly profitable business around a combined base of approximately 20 million+ subscribers to navigation applications for mobile phones. The $170M valuation also helps TeleNav which is approaching an initial public offering. The announcement is potentially bad news for Google which recently entered the smartphone navigation space with its free turn-by-turn navigation application for Android-based phones. NIM's relationship with Verizon will likely result in Verizon-only capabilities being leveraged in the market, such as probe-based traffic data, which Google will be unable to match due to its much smaller base of users. According to Strategy Analytics estimates, Android-based smartphones will represent approximately 10% of all smartphones in 2010, but only a subset of these will be compatible with Google's TbT application and only a subset of these will actually download the application. Nevertheless, the navigation on smartphone business opportunity has again proven to be more significant than originally thought, now representing a market worth, in total, as much as $2B. Much of this value is deriving not only from the application subscriptions but also from the sale of additional "premium" content, such as traffic data, or updates within the applications, not unlike other profitable application segments, such as on-device gaming. In the end, carriers are more likely to support navigation partners that provide a path to profitability from subscriptions and in-application sales versus free applications such as Google's Tbt offering. So, while Navigon will continue to dominate the iPhone navigation segment and Google will increasingly rule the Android world, a combined TCS/NIM will grow stronger via its relationship with Verizon. Of course, TCS/NIM will also benefit from offering a more fully evolved and acceptable navigation solution relative to the Google offering. http://www.networksinmotion.com/newsroom/12_01_2009_TCS_acquire_NIM.php-Lanctot