New analysis from Frost and Sullivan, Russian Consumers' Desirability and Willingness to Pay for Connected Navigation, Location-Based Services and Features, finds that the Russian navigation market saw unit sales of 0.45 million in 2008, and will likely reach 2.0 million in 2012.

This shift is attributable to exponential growth in the GPS-enabled, smartphone-based navigation market and to steady growth in the PND market.

Frost and Sullivan estimates that 35 per cent of Russian consumers are interested in a smartphone-based navigation device while nearly 63 per cent are willing to pay more than euro 4 per month for a vehicle tracking service based on a GPS-enabled smartphone.

This indicates that firms must define a clear strategy; positioning products, services and business models around the ever-converging GPS-enabled mobile handsets market in order to expand telematics and navigation into the Russian market.

"Handset vendors like HTC, Nokia, and Apple are propelling the navigation market in a new direction by pushing more GPS-enabled smartphones into the Russian market," notes Frost and Sullivan Programme Manager Praveen Chandrasekar.

"In 2008 the balance shifted more towards the handsets-enabled navigation market rather than PNDs. This trend, together with results from Frost and Sullivan's end-user research, clearly shows that this market needs to be addressed with a smartphone based portfolio in order to succeed."

Eight out of ten current owners of navigation systems in Russia want to purchase another navigation system within six months. Of these, 49 per cent still prefer a PND, but a growing 30 per cent favour a smartphone-based navigation system. Russian consumers are willing to pay upwards of euro 100 for a smartphone-based navigation solution. In light of the current recession, this solution could clearly prove to be the low-cost killer alternative.

The economic crisis has put a damper in consumer spending habits in Russia. Although Russian consumers indicate that they are willing to pay upwards of euro 300 for a navigation device, they might not necessarily be ready to do so in this economic climate.

"The recession comes at the wrong time; the navigation market, driven by GPS- enabled smartphones and PND, was on an upswing," explains Chandrasekar. "However, consumers are increasingly cautious and this might slowdown market development."

Navigation device and service providers, telecom operators, handset vendors, telematics service providers and automakers must consider building a low-cost portfolio of navigation and telematics services for the GPS-enabled smartphone segment. Russian consumers indicate that they are willing to pay more than euro 100 for such a device and more than euro 4 per month for services like vehicle tracking.

Clearly, this needs to be the primary offer from the original equipment manufacturer (OEM) and the aftermarket community in Russia.

"Automakers and vendors in the telematics, navigation and telecom community need to address the Russian market with a GPS enabled smartphone portfolio," advises Chandrasekar. "This must be backed up by a solid business model which offers a variety of pay models and subscription plans."

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