You have probably already seen this. However, I thought it might be interesting to see a discussion from some of you who know a lot more about this subject than me.

The following is a link to the story, for anyone who is interested.

Facet Takes On Navteq, Tele Atlas

Mike Flannigan

Hi Mike,

In the short term I think Facet will be quite limited in who is interested in its product. It only covers the continental US. Most GPS and smartphone manufacturers are interested in the world and are more likely to partner with companies who can supply them with as much as possible rather than dealing with a bunch of different suppliers.

There are two factors in this sort of decision-making. If they agree to take all of their maps from one supplier they can usually get a pretty good price. And there will be some commonality to the map features across products.

If they buy Facet's US product, and especially if it really does have a lot more useful stuff in it than Navteq's or TeleAtlas, what do they tell users in the rest of the world about not having the same features available?

In practical terms, if the Facet US product does have all that extra usefulness in the map data, the GPS manufacturer will have to do a lot of work in their software to make it accessable by the users. That means going right back to customer focus groups on how to get the features into the interface so they are most beneficial, not just some programmer sitting down and hacking out some code.

I'm not saying companies shouldn't or won't go forward with Facet's product but there's huge risk involved for any large international GPS or smartphone manufacturer. I think the biggies will sit back on their hands and wait for at least these few things: how quickly can Facet get non-US products available; will the non-US products have all the same extra features as the US product; will the public jump all over those extra features or will it be a big yawner?

The other two will have similar issues. To get with the biggies they will have to find a way to prove their map products are good and that the differences between how they assemble the data, versus Navteq and TeleAtlas, result in better maps rather than worse, on balance.

I think the wiki- and crowd-based maps are exciting concepts but I think they are destined to be very much niche products in the short term. I'm not sure they'll ever go anywhere if their manufacturers set their sites on marketing them to the big GPS and smartphone manufacturers. I think they'll go much farther, much sooner, if they ensure there are versions of the maps that you can plug into Garmin or TomTom devices or Streets&Trips or Mobile PC or iGuidance and target existing users of those technologies.

If Garmin or Microsoft see an actual market for crowd- or wiki-based maps blossoming among their customer base, I think that will go a bunch farther toward getting their serious attention than trying to market to them directly. Companies like Garmin have way too much to lose to drop their association with Navteq without there being extremely strong evidence that it's going to pay off. These large companies are horribly risk-averse under normal circumstances. In the current economic climate they will be even more conservative, where many consumers don't have jobs so they don't have money to spend on one of the most discretionary (eg. most deferable) categories of consumer goods, and those with the money are choosing to sit on their wallets as well.

But despite the negative tone to my comments, I am excited to see that there are some alternatives to Navteq and TeleAtlas trying to emerge and doing so with some genuinely different approaches, not just MoreOfTheSame at a cheaper price.

So that's what I think. This week, anyway. Next week ...

...ken...

Ken:

Thanks for that.

I don't want to see something succeed just because it serves my personal needs (US), I just hope to see something better than what we currently have. I can see what you are saying makes a lot of business sense and am just hoping for better choices.

Sincerely,

Mike Flannigan

It is nice to see alternative map data sources, but it is going to take a very long time till (if ever) any of them will reach the quality of Navteq or Tele Atlas map data. I'm now not talking about how accurately they can draw a road on their map, but rather I'm talking about errors and omissions.

But I'd be interested in looking at a product by AND (Automotive Navigation Data). AND has been in business for a long time, and I think it has maps for many parts of the world Navteq nor Tele Atlas does.

I don't trust maps derived from satellite images, aerial photographs, or crowdsourcing. OpenStreetMap, in particular, is in a pretty bad state except in isolated pockets. There's no substitute for actually driving the roads and entering data seen from out the windshield.

All the same, it appears that the barriers to entry are as great as we might think, even if you decide to do real drivethroughs. There are 4 million miles of paved roads in the US. Put in some assumptions about the time it takes to drive them, and the cost of paying two-person driving teams, and you end up with a surprisingly low number. This isn't quite the end -- you have to include unpaved roads, and certain privately-maintained roads, and addresses, and POIs -- plus you also have to drive roads multiple times to record all features and check accuracy. But overall, it's not that much money. Garmin had $733 million in earnings in 2008.

Even Navteq only spent $275 million on "database creation and distribution costs" in 2006. Since they have to periodically redrive every road to check for changes, the cost to generate a roads database from scratch isn't that much more than the cost to maintain a database annually.

taoyue:

Thanks for taking the time to help me better understand this subject.

Sincerely,

Mike Flannigan

Note that Facet has had its product available for a couple of years now. Perhaps they just put out a press release, or are launching a new campaign to try and win business from the device makers?

tauyoe:

Twice magazine left out that important fact. I just assumed this was a new thing. We both know what you do when you *** u me !

Thanks,

Mike Flannigan