The smartphone's chief competitors offer real satellite navigation systems, users love the feature, and it could be a moneymaker for Apple
If there's anything the iPhone has lacked compared with other phones in its class, it has been high-speed connectivity and the ability to determine its location accurately. Apple (AAPL) will address the first shortcoming in a matter of days, when it unveils the second version of the year-old iPhone on June 9.
I'm hoping Apple also tackles No. 2—by including support for Global Positioning System navigation. For one thing, most of the handsets in the iPhone's peer group contain GPS chips by default. Research In Motion's (RIMM) BlackBerry devices have included GPS support for a few years now, while Finland's Nokia (NOK) considers GPS so strategically important that last year it spent $8.1 billion to acquire Chicago's Navteq (NVT) (BusinessWeek.com, 11/12/07), a digital mapmaker that supplies all the major navigation device companies.
What's more, navigation applications can make a lot of money for carriers, and by extension, Apple, which splits service revenue with AT&T (T), its partner in the U.S. A survey last year by Nielsen Mobile found that navigation applications were second only to games as the most popular downloadable wireless application. Companies like TeleNav and Networks In Motion have deals to supply their software and services to all the major carriers. The potential market is huge: iSuppli pegged the number of navigation-ready handsets sold last year at north of 160 million units, more than seven times the number of standalone navigation devices sold.
Using Cell Towers Doesn't Cut It
The iPhone currently employs a system often described as pseudo GPS to determine its location. Instead of getting a true location fix from the GPS satellites orbiting Earth, it determines its position in part by using the nearest cell towers, using technology from Google (GOOG). It also fixes its location based on Wi-Fi access points using another technology from Skyhook Wireless.
The result is adequate for the casual pedestrian user, and will even work for basic driving directions. Google Maps is one of the best applications on the iPhone, and its satellite view wowed crowds in early iPhone demonstrations. Still, the accuracy of iPhone's location services is hit-or-miss. It's not unusual for Google Maps on the iPhone to show you a block or two away from where you actually are. Sometimes it will put you within 100 feet. Any civilian-grade GPS receiver worth having should be able to pinpoint your location to within 10 feet.
All the iPhone would need is a GPS chipset, and it wouldn't set Apple back much either. Your standard-issue GPS chipset costs about $5 from the manufacturer, says David Carey, president and CEO of Portelligent.
So is GPS on the way or not? Rumor sites point to what are thought to be iPhone screen shots of features that include "geotagging," a way to associate pictures with where they're taken, which would imply the new phone will contain GPS. Other rumors cite people in the know who also say Apple CEO Steve Jobs will surely promote GPS capabilities. Since Apple is mum on the subject, we can only speculate.
Needed for the Whole Package
My money's on GPS being included in version 2. But even if it's not, there's a strong case for including it in the third version, likely to be released sometime in 2009. Adding GPS would give the iPhone an indisputable grand-slam lineup of features: navigation along with best-in-class music and video, Web browsing, and voice and data communications. Imagine how tightly the Web browser, address book, and other features could be integrated. Google searches on the Web could tell you not only the address of the place you seek, but also tell you how far you are from it. Your address book could do the same thing.
Imagine how social networking could be enhanced by the knowledge that your closest friends are nearby, assuming they've opted to let you see where they are? You and your very best friend might set your iPhones to make a special sound when you're within, say, an eighth of a mile of each other. (A service called Loopt already does this on other handsets.) Imagine the third-party applications that could harness GPS: games that involve moving around—say, a virtual Capture the Flag or a virtual obstacle course; business applications that tell the central office where employees are in relation to where they're supposed to be.
Established companies in the GPS business already see the phone as the natural place to be, and from the looks of their product plans they already expect the iPhone to enter the market. Garmin (GRMN) will later this year launch a device called the Nuvifone that looks a lot like an iPhone and will double as a personal navigation device, or PND.
And if the rumors about the iPhone's expected lower price (BusinessWeek.com, 5/1/08) are borne out, the iPhone will become even more compelling as an all-in-one device. The average selling price of a navigation device is about $280, down from more than $400 as recently as three years ago. Why bother with the PND for your car when your phone is already a perfectly good PND with a bright and gorgeous touch-sensitive screen to boot?