AS IN-CAR navigation becomes available as a factory-installed option and even as standard equipment on some luxury cars, competition among hardware and software suppliers is intensifying.
Navigation systems, which determine a vehicle's position and display it on a liquid crystal monitor, are expected to boom in the next four years. Sales in Europe will rise from 500,000 units this year to 2.3 million in 2002, according to the independent research firm Dataqueste.
The market is now concentrated in Germany, where digital mapping was completed first. But demand is increasing elsewhere in Europe as software has become available for other countries.
Global revenue for navigation systems in 1997 was about $335 million, according to Frost & Sullivan, a Frankfurt research firm. That is expected to grow tenfold by 2004.
In Japan, where the technology took hold first, 1.4 million systems were sold last year. But demand in Europe is expected to surpass Japan eventually and suppliers are preparing for the upsurge.
'It seems as if the war already has broken out,' said Koenraad Beyaert, market communication manager of Tele Atlas in Ghent, Belgium. Tele Atlas is one of Europe's two providers of digital road map databases. It is a 50-50 joint venture between Robert Bosch and Janivo Holding BV of the Netherlands.
Tele Atlas says it is Europe's market leader for digital road maps for in-car navigation systems, claiming a share of 65 percent. NavTech, the only other European supplier of road map software, also claims to be No. 1. NavTech reckons it has 80 percent of the market.
NavTech, based in Best, the Netherlands, is a subsidiary of Navigation Technologies Inc. of Rosemont, Illinois, in the USA. Navigation Technologies' majority shareholder is Philips NV, the Dutch electronics company.
The two rivals offer digital road maps of comparable quality, said Ralph Heinrich, a spokesman for Siemens Automobil Technik, which supplies navigation systems for the Porsche 911 and Boxster.
NavTech has 40 employees in Best and 180 in the rest of Europe, working on software updating. Tele Atlas has 600 employees, but they work on road map software for other purposes as well.
The success of navigation systems in Japan in the early 1990s focused attention on the technology, which uses information from global positioning satellites, combined with the vehicle's speedometer and a gyroscope located in the car. But introduction has been delayed in Europe because of the time-consuming job of mapping the complex road system.
Software companies say mapping Europe is made more difficult by the fact that many old towns are built around complicated junctions and roundabouts. In addition, the infrastructure in the countryside is more dense than in Japan or the USA.
'Digitizing European road maps will cost us about DM300 million ($168 million),' said Tele Atlas' Beyaert. He said that 65 percent of western Europe has been mapped.
NavTech began with a pilot project in the city of Brussels in 1991.
'It was a typical European city with bilingual street names,' said Karel Nouwen, NavTech's director of planning.
In 1994, BMW became the first to offer in-car navigation in Europe - as standard equipment on the 7 series. BMW used Philips' Carin system and NavTech's database.
'Five years ago most carmakers were talking about introducing in-car navigation systems,' said Nouwen. 'Two years ago they started to make decisions about systems.'
Prices will fall
Industry executives say Europe's top-selling system is the Carin unit developed and marketed by Philips Car Systems, which was acquired earlier this year by German supplier group Mannesmann/VDO. However, Mannesmann won't comment on its market share.
Beyaert of Tele Atlas says that Carin and Bosch's Blaupunkt subsidiary, which sells the Travel Pilot system, have over 90 percent of the European market. The rest is held mainly by Siemens, Magneti Marelli, Alpine and Becker.
Peter O'Brien, NavTech's vice president of sales and marketing, said over 50 percent of all European in-car navigation systems are aftermarket applications.
'That will grow in the next three or four years,' he said, 'then go down because more and more cars will have standard navigation systems fitted.'
O'Brien predicted that overall sales will rise steadily. 'We expect it to double each year,' he said. 'By 2006 each new car will have some sort of navigation system installed.'
Mannesmann/VDO spokeswoman Iris Merker said that prices will fall as production volumes grow.
'In 1995, our Carin system cost DM7,000,' she said. 'This year it is DM4,000 and in 2000 we expect it to be about DM2,000.'
Merker said Germany is the leading market for navigation systems. German carmakers offer factory-installed systems on most models. Daimler-Benz, BMW, Audi and Porsche have systems available for their entire model ranges. Opel offers navigation for all models except Corsa. Most non-German carmakers in the country offer aftermarket systems as an option.
BMW sells 50 percent of all 7 series with in-car navigation.
'In the beginning we really underrated its potential,' said BMW spokesman Thomas Steffes. 'We learned a lot from customer feedback and discovered the importance of improving operational ease.'
More than anything, Europeans' travel habits will boost the market for navigation systems, according to Nouwen of NavTech.
'While the Japanese may take the train,' he said, 'Europeans tend to take a car on a three- or four-hour drive.'