It’s 9 o’clock in the evening, you’re in an unfamiliar part of town, and you’ve run out of cash.
No problem. Just type a request to find the nearest ATM into your auto navigation device, and the computer establishes the quickest route there, based on distance and posted speed limits. You are then guided turn by turn via directions on the screen, as well as by voice prompts.
Such technology, held up for years by cost and reliability, is starting to make a move and two local companies, Magellan Corp. of San Dimas and Monrovia-based IVS Inc., are in the forefront.
“As the market scales up and prices scale down, I expect consumer demand (for in-car navigation systems) to increase steadily over the coming years. At some point, the GPS navigation systems will move out of the aftermarket and be offered as an option directly from the car manufacturer,” said Joshua Harari, senior investment officer for S & P; Equity Group.
GPS stands for Global Positioning System technology, which uses a network of satellites to pinpoint the exact location of a car equipped with a special antenna.
Cars are just the most recent application for GPS products, which the United States GPS Industry Council says will create an $8.5 billion industry nationwide by 2000. GPS has been most widely sold for military, commercial aviation and commercial nautical uses. The second-largest use, Harari said, has been for recreation, after hand-held GPS units dipped below $100. Hikers and boat owners take the systems with them not only as an orienteering tool, but also a safety device.
Japan started the push for auto navigation systems in 1990 and now leads the market. But the United States is catching up; in North America, the number of vehicles with navigation devices is expected to double to about 15 percent between now and 2000, according to the Electronics Industries Alliance Market Research Center.
Magellan, which recently merged with Sunnyvale-based Ashtech Inc. and last year acquired Rockwell’s commercial GPS division, reported that domestic sales of its “PathMaster” in-car navigation units could hit $3 million this year, up from just $40,000 in 1997.
That growth rate towers over the 30 percent rate of growth Magellan is seeing for its industrial and hand-held navigational products, although they currently constitute a larger share of Magellan’s sales.
“GPS was originally created for government and airline applications, but now consumers are driving the industry,” said Magellan President Chuck Boesenberg. “So-called smart cars with such features as collision avoidance are still five to 10 years out, but the navigational systems are available now.”
Magellan’s PathMaster consists of a computer with a 4-square-inch screen mounted inside the car, an antenna that uses GPS satellites to pinpoint the car’s location, and a regional database of digitized maps.
If the driver does not like the computer’s suggested route (e.g., the driver knows that that route is severely congested at that particular time of day or wants to avoid freeways), then the driver can ask the computer to display the next-best alternate routes.
The navigation system doesn’t even have to be programmed with an exact address. A user can ask to be directed to the closest hospital, ATM, hotel, or well-known landmarks such as airports or amusement parks, or even a given intersection.
PathMaster is for sale in more than 12,000 retail outlets, ranging from the Sharper Image catalog and car dealerships to K-Mart. Besides the automotive aftermarket, other distribution channels being targeted are commercial fleets and car rental agencies.
“These groups are the most logical to use the system since salesmen and car renters are least likely to know where they’re going,” Boesenberg said.
For example, Hertz has installed over 8,000 Magellan navigation systems into its cars and charges $6 a day for the system.
“Our customers have called it everything from the ‘best invention’ to a ‘complete lifesaver,’ ” said Paula Stifter, a Hertz spokeswoman.
Magellan faces growing competition from Microsoft Corp., Philips Electronics, Motorola and Trimble Navigation Ltd., which already have in-car navigation devices under development or already on the market. One company, Troy, Mich.-based OnStar, has its GPS device installed as an option in certain 1998 models of Cadillacs, Buicks, Oldsmobiles and Pontiacs. However, OnStar is significantly different from the other devices because it depends on a cellular-phone link between the driver and a direction center, rather than a computer installed in the car.
Local competitor IVS is trying to break into both the rental car and private automotive markets by marketing a navigation system that it says is more advanced than what the competition has so far offered. IVS is a 10-month-old joint venture of Irwindale-based automotive products developer Amerigon and Japanese car-part manufacturer Yazaki Corp., and its staff is made up primarily of Caltech alumni. On April 16 it announced the debut of a completely voice-activated, portable navigation system called Avstar.
“Our motto is affordability, portability and safety,” said Mal Hollombe, vice president of sales and marketing. “Avstar is the world’s first GPS system to be hands-free and eyes-free, so a driver never has to take his eyes off the road. Also, unlike our competitors, the system can be plugged into a cigarette lighter. After all, people usually know where they’re going, so the system can be moved from car to car as needed.”
The base price of Avstar, which should hit the market in early June, is $1,200. Magellan’s product retails for just under $2,000. The Avstar system is similar to Magellan’s, but a driver gives a destination and receives directions solely through voice commands. The Avstar computer can understand all American accents, ranging from New Yorkers to Southerners.
Hollombe said IVS is holding discussions with several large rental agencies that want to test the system.
Both IVS and Magellan are developing even more sophisticated systems. Magellan engineers are working to bring real-time traffic updates to PathMaster, so the computer can adjust a route accordingly. Meanwhile, IVS is developing software that will allow salespeople and truckers to directly download their next route information.
“There is enormous potential in this industry, which has a lot of room for advancement,” Boesenberg said. “The next step will be to bring data into the car, just as the Internet brought data into the home.”
So much potential, in fact, that Boesenberg expressed an interest in working with IVS.
“We follow the personal computer model of business, so there is a good chance that we would want to provide the hardware platform for IVS’s product,” Boesenberg said. “Regardless, the competition is good since it increases awareness of the market.”
How did IVS executives respond to the idea of working with Magellan?
“We currently have no reason to liase with them right now,” Hollombe said. “But we have other products under development that may open up the opportunity to work with them.”