April 9, 2008

Low Priced GPS: Keep Competition at Bay

It wasn't too long ago when new brands blew onto the market with low priced GPS options while the big guys maintained high prices and probably maintained a lot of profit. On Black Friday 2006, while others were selling GPS units at twice the price, Mio stormed onto the scene with a $149 little unit, the Mio C310x that put them on the map. Since then Mio has launched upgrades, and currently has its Mio C230 as its entry level unit.

Last year on Black Friday, Navigon stole the show with the low priced Navigon 2100 that shipped with traffic subscription for $99. The Navigon 2100 is still around and shipping like crazy when it's on sale. How's it doing at the regular prices though?

A recent check of the Top Selling GPS Units at Amazon tells us a lot:

#4 - Garmin Nuvi 200 - $149
#5 - TomTom ONE - $146
#22 - Magellan Maestro 3100 - $129
#30 - Navigon 2100 - $160 (without traffic)
#34 - Mio C230 - $134

Even with a $15 - $20 discount, the Garmin and TomTom units are outselling cheaper competition, keeping them at bay.

With prices like these it's no wonder that the big guys are doing well on sales, and the others are not. For a long time, when GPS systems cost a healthy chunk of a paycheck, it was worth saving 20% by going with something other than a big name. Now it's increasingly tougher to get meaningfully cheaper than a $149 price point that the big names are holding right now.

The trouble is that TomTom and possibly others aren't making the money that their investors want them to. So something is going to change, or has to change if they want their stock price to go up. That change could be a small shift in costs that allow an extra $10 to be made on each unit, which would more than make up for the lower margins recently seen.

Smaller companies are finding it increasingly harder to get a firm grip on the entry level end of the market, while big names are finding it harder to earn money at this end of the market too, driven by aggressive price cutting.

Tough on GPS makers and their stock prices, good for your wallet. With all of that said, I fully expect a $99 special out of the big guys for Black Friday 2008.... see you there.