Until recently, global positioning system (GPS) technology had been limited to a couple of markets. There was the retail market, in which consumers and gadget geeks purchased GPS units for their cars or for elaborate geocaching games. Then there was the high-end transportation market, in which large corporations deployed elaborate and expensive solutions to manage vehicles and shipments. But as GPS prices fall and the technology becomes integrated into mobile devices, opportunities are growing for solution providers between the two extremes.

GPS is a satellite-based navigation system originally developed by the U.S. Department of Defense. The DOD opened the system for commercial use in the late 1990s (see sidebar for a history of GPS and how it works). Because of high costs, initial commercial applications were limited to niches such as long-haul trucking and precision agriculture. More recently, however, GPS has shrunk to a chip-level technology, leading to economies of scale and strong growth in GPS-based personal navigation devices (PNDs).

"A few years ago some of these units cost more than $1,000," says Mark Kuta, senior vendor business manager, Mobility Division, Ingram Micro. "Now you can find a personal navigation device with national maps of the United States for $200 to $300."

In-Stat estimates that sales of PNDs in the United States will increase from between 1.5 million units and 2.0 million units in 2006 to between 2.25 million units and 2.7 million units in 2007, according to Stephanie Ethier, senior analyst. PND manufacturer TomTom puts the numbers even higher, saying that 2.5 million GPS automobile-based devices were shipped in the U.S. in 2006 and predicting that 5 million to 8 million will ship this year. "We're not talking about a niche market here. Navigation is a basic need for every human being on the planet," says David Wenning, vice president of sales for TomTom. "We estimate that only 6 percent of the total market has been penetrated. We're just in the early, early stages."

GPS as Add-on
These trends spell opportunity for solution providers. GPS is packaged in three basic ways:

• As an autonomous piece of hardware and software
• Integrated into or linked to a mobile device that subscribes to a WAN service for the software and mapping
• Integrated into a device that uses software and mapping stored on a memory card

At the most basic level, solution providers can offer GPS as an add-on hardware module to mobile devices, Kuta says. "GPS is one of the most frequently requested accessories for mobile," he says. If a VAR is mobilizing Microsoft Exchange for a customer, GPS is another capability he or she can offer that will help the customer get the best return on that mobilization. A client may want mobile e-mail for the sales force, for example, but adding GPS would also save time and money. "How much money are they spending for GPS every time they rent a car?

How much time are they spending on MapQuest plotting their routes from Point A to Point B?" Kuta asks. At today's lower prices, GPS units are much easier to cost-justify. And with high gas prices, eliminating fuel wasted due to drivers getting lost or taking indirect routes can mean significant savings. Says Kuta, "This is a natural fit for mobility resellers as an add-on solution."

Chip-level integration also has made it easier to build GPS into a variety of mobile devices, including laptops and mobile phones. According to Panasonic executives, about 10 percent of fully rugged Toughbook laptops now ship with integrated GPS. And U.S. mobile phone operators have been required to incorporate technology into their phones so that 911 callers can be located in emergencies. Both Sprint and Verizon Wireless are using GPS, according to Chris Hazelton, senior analyst of mobile devices at IDC. In fact, last fall Qualcomm announced that more than 200 million mobile handsets containing its GPS chipset had been shipped worldwide.

"The phone operators are now trying to monetize that investment by offering turn-by-turn navigation and location-based services," says Hazelton. He expects strong growth in GPSbased services in phones over the next 12 to 18 months. As more of those laptops and phones are sold into the market, they create an ecosystem of GPS capability that can become a platform on which to build business applications and services.

GPS Service Revenue
GPS-based services can deliver significant revenue opportunities. As an example, TeleNav offers two different navigation services for mobile phones with integrated GPS. The services are primarily sold through the major mobile carriers. TeleNav GPS Navigator is oriented toward the consumer but is also appropriate for white-collar field workers, such as insurance adjusters, according to Sal Dhanani, TeleNav's cofounder and senior director of marketing. Its second service, called TeleNav Track, is designed specifically for enterprises and the public sector, with GPSbased location tracking, wireless forms, electronic time-sheet reporting and interactive dispatching. Solution providers derive revenue from the sale of the phone, sometimes get setup fees from customers and receive recurring activation commissions for the services.

Ingram Micro makes it easy to offer such services to customers. "As a master agent for Sprint-Nextel, AT&T/ Cingular and Verizon Wire less, we authorize and train our resellers to be subagents and to offer activation services," says Kuta. "So resellers can procure the hardware devices through us, activate them through us and get a commission for the activation," he explains.

"That commission, depending on the voice and data plan, can range from $20 to several hundred dollars."

The highest margins, however, come from helping customers integrate GPS into their business operations. Until recently, that plum was reserved for integrators specializing in niches such as transportation, field service and logistics. But now PND makers are launching products targeted to the business enterprise and are turning to the channel to help them develop the market.

Navigating the Mainstream
In January, for example, TomTom announced TomTom Work, a fleetmanagement product that combines the TomTom PND, a black box called the TomTom Link and WebFleet software. The PND and the Link are installed in each delivery vehicle, while the Link is installed in a manager's vehicle. Using a wireless WAN and the software, the manager can track the location of vehicles and direct the drivers. He can reroute the vehicles, send the drivers new instructions, and verify orders or other information.

Solution providers make a margin of more than 15 percent on the hardware. But the real money comes from customizing the solution for particular customers with specific applications.

While lower prices are driving increased applications in the "whitecollar" business market, they are also encouraging solution providers who previously specialized in high-end niches to move into more mainstream solutions.

Dennis Scott, president of Surface Systems & Instruments, has been building sophisticated pavement-measuring systems for the construction industry for 13 years. As part of that business, he began selling Panasonic Toughbook laptops with integrated GPS. Now Scott is expanding the mobile technology division of his company to a new vertical market -- transportation. Scott is looking to partner with software companies that offer innovative applications for the transportation market. "It doesn't take much to get a GPS receiver into a vehicle," he says. "What you do with the signal is the better part of the solution."

Surface Systems is working with one partner on a solution that combines a wireless WAN, RFID tags and GPS to track valuable cargo, such as semiconductors. "The drivers don’t even know the technology is there," Scott says. That way, if the cargo is moved off the truck at an unscheduled stop, for example, the company can track when and where it happened.

Broader GPS Applications
Applications go beyond just tracking and directing trucks. "You're starting to see an evolution of GPS," says Darin White, vice president of sales at solution provider Paradigm System Solutions. "It's no longer just 'How do I get to where I'm going?' It's also becoming 'Where is my stuff?' "

Indeed, a key for any solution provider who wants to get into the most sophisticated GPS applications is to find a good software partner and to understand how to integrate GPS into back-end systems. "You have to understand the importance of the data and how customers can use it," says White. "That's how we create value. We show them how the technology can improve their operations and how that in turn improves their bottom line."

For More Information
Want to learn more? Ingram Micro's Mobility Division can help in selecting, selling and installing GPS solutions. For help with GPS sales, Ingram Micro's customers can contact the division's inside sales team at (800) 456-8000, ext. 66669 or 66054, or visit Mobile Wireless. For training, business development and help with wireless service activation, contact field market development managers. Regional contacts can be located at Mobile Wireless.