Interview with Naviforum Speaker Thilo Koslowski, Gartner - Preface
With the intensification of the competition, the China PND market has seen PNDs only priced at 299 RMB ($44), the lowest price in global PND markets. In contrast, 820,000 PND units were sold in China in 2007 according to the latest study of Analyses International, growing much slower than expected. Though various PND brands coexist in the China market, all of them can’t outlive the intensifying price war in the following two years. It seems as if information services that can be brought by Connected Navigation have become the strategic focus for forward-looking big brands. With questions on hot issues in the industry, NaviForum interviewed Thilo Koslowski, Vice President Automotive and Vehicle ICT, Manufacturing Industry Advisory Service, Gartner Inc. He will give a speech at the forum this year and share his insights and views with all the attendees. The contents of the interview will be issued on NaviForum Newsletter in two parts. Here is the first part:

Thilo Koslowski is Vice President Automotive and Vehicle ICT, Manufacturing Industry Advisory Service, Gartner Inc.,the largest technology advisory company in the world.  Mr.Koslowski advises international business and technology leaders in the automotive, telematics, communication and consumer electronics industries on how to maximize business opportunities, create innovation and establish strong, cross-industry partnerships.  He also has been an advisor for global government agencies focusing on economic growth and provements in transportation.  Mr. Koslowski’s strategic guidance focuses on the automotive demand & supply chains and vehicle-centric informationand communication technologies (Vehicle ICT).

NaviForum: As the competition in the China PND market intensifies, some PNDs are even only priced at 599RMB ($85). In contrast, 820,000 PND units were sold in China in 2007 according to the latest study of Analyses International, far slower growth than expected. Though various PND brands coexist in the China market, all of them can’t outlive the intensifying price war in following two years. It seems as if information services that can be brought by Connected Navigation have become the strategic focus for forward-looking big brands. In international markets outside China, PND market is much more concentrated to several big brands, so does international markets have similar problems to those in China? What can Chinese local brands learn from the ideas of international big brands?
Thilo Koslowski: The PND market is half way through a commoditization phase.  We predicted this phase first in summer 2005 and even specified that late 2006 would be the start of falling prices and profit margins.  I personally remember defending our view in heated discussions with overly optimistic executives of PND manufacturers and investors. Truth is that prices for traditional PND offerings will continue to fall and that consolidation and mergers are likely to follow next.  I can imagine a future when basic PNDs with monochrome screens and limited map data will be given away for free to help consumers find specific businesses such as a specific brand’s gas stations.  To achieve future financial objectives and stand out from the competition, it's imperative that navigation solution providers in any global region redefine their strategies, prepare for radically different business models and expand their technology choices:
a.  Embrace platform diversity. Rather than viewing alternative technology platforms as competition, navigation solution providers should offer their products on a variety of platforms, such as PNDs, cell phones, UMPCs, etc.
b.  Prepare for disruptive business models that commoditize basic navigation functionality and traditional revenue models.
c.  Develop navigation solutions as services rather than device-centric offerings. Navigation services offer alternative business models, improve ease of use, increase user relevance and provide brand loyalty opportunities (for example, users are familiar with a specific service and don't want to relearn menu structure and so on).

NaviForum: Besides competition among hundreds of brand and price war, the China portable navigation market is also obsessed with piracies. Some IP right problems even result in lawsuits between government-certified digital map providers. At NaviForum Shanghai 2007, map providers already realized the high strategic significance to accelerate the transition from selling products to selling services, so they have paid more attention to Connected Navigation. The famous Gartner Hype Curve about industry development seems as if Connected Navigation is just the signal of the phase when all the industry players start to seek for new business models and new partners after the expected slowdown. To which phase of the Gartner Hype Curve have the European and U.S. markets developed? What’s the implication for the China market?
Thilo Koslowski: Connected navigation offerings are just beginning to enter markets around the world.  Mass market penetration is still a few years off.  Over the course of five to seven years connected navigation solutions will become ubiquitous on various device platforms.  Ultimately navigation solutions will become device independent and navigation services will be wirelessly accessible by users regardless of which device the users happens to use at a given time including.  This is the biggest mind change required by executives in the PND and automotive space since it will require innovative business, technology and revenue strategies.  China in particular will see a strong focus on cell phone based navigation solutions that can easily be connected and integrated with other services to provide up-to-date point of interest, traffic and social community based applications.  Overall the role of navigation solutions will change from being the primary application to a secondary tool-like function that delivers the final value of a location-aware service offering.

NaviForum: Over the past year, the U.S. wireless carriers have had much growth in location-based service (LBS) and navigation. What are the main reasons for their fast growth? Is China likely to duplicate the growth mode? Could you give some suggestions for the Chinese government? Does the Chinese government need to enact policies to promote the LBS and navigation?
Thilo Koslowski: China and Asia overall will become one of the key markets for location-aware services in the future.  By 2011 Asia will have the largest share of location-aware revenues in the world.  The fast growth in China will come from mobile phones and new service offerings that take location-aware applications to the next level.  For example, local search will be combined with vehicle and/or pedestrian routing and may even lead to a sponsor marketing opportunities that will offset the cost for consumers.  The Chinese government can help to capture and maximize this opportunity by building  the required technology infrastructure and promoting innovation across industries.