The global market for “automotive infotainment” will decline in the next five years with GPS as a major driver, according to new data from ABI Research.
Negative CAGR, Revenue Growth Expected
The global compound annual growth rate (CAGR) for revenue from automotive infotainment products and technologies (which includes in-vehicle navigation, audio, video and Internet) between 2010 and 2015 is expected to be negative 3.5%. ABI bases this prediction on its forecast of a 15.9% shrinkage in the worldwide automotive infotainment market from more than $29.5 billion this year to $24.8 billion in 2015.
Loss of Revenue in GPS Drives Market Decline
Revenue declines associated with GPS/navigation systems will drive the overall loss in automotive infotainment CAGR and revenue during the next five years. The increasing popularity of aftermarket products and free or low-cost smartphone applications will drive down the revenues from in-vehicle GPS/navigation systems by two-thirds between now and 2015. In 2015, OEM in-vehicle internet and networking are expected overtake OEM GPS/navigation systems as the primary revenue driver for the market for the first time.
Paradoxically, the number of vehicles containing GPS/navigation systems worldwide will double in that time period. Excluding declines in GPS/navigation revenue, ABI predicts a healthy CAGR growth of 20% for the global automotive infotainment market in the next five years.
Opportunities, Risks Exist
ABI advises that a number of opportunities and risks exist for marketers in the automotive infotainment market. Automotive infotainment is beginning to flourish, thanks to standards that ensure these systems will not be obsolete within a few years, since software can be updated, and hardware can be upgraded. Standardized infotainment systems are drawing the attention of third-party developers eager to write software with a potential sales base of millions of drivers. Third-party applications hold the promise of licensing revenue, and some ongoing service revenue could also be generated by third-party Internet or other services.
However, although automotive infotainment is on the cusp of attaining mass-market status, OEMs and aftermarket vendors face a number of challenges to sustained revenue growth. For one, consumers may like premium audio and video content, but many will be reluctant to pay high subscription fees when free alternatives are common. On top of this, the sector also faces a potential threat as legislators ponder concerns about driver distraction.
European Mobile Mapping Increases 68%
In one sign of a growing threat to the global automotive GPS/navigation system market, use of mobile mapping and direction services across Europe increased 68% between February 2009 and February 2010, according to comScore MobiLens data.
In total, there were an average of 21.1 million users of mobile mapping and directional services in the EU5 nations of the UK, Germany, Spain, France and Italy in the three months leading to February 2010. This was a 68% increase from an average of 12.5 million EU5 mobile mapping and directional services users in the three months leading to February 2009.