Until recently this market was driven by the CDMA players, namely Qualcomm, serving large CDMA markets such as the US, where the E911 mandate stipulates the use of location-based technologies in handsets, and in countries like Korea and Japan where demand for location-enabled services is higher than in other regions.
More recently, large handset vendors such as Nokia have put their weight behind GPS and are now ramping up shipments across Europe in response to rising demand for GPS applications.
We expect growth to slow in the near term in the US, Korea and Japan, where we already see good levels of GPS device penetration. Although other markets such as Western and Eastern Europe as well as China and India start from lower overall penetration, they will grow significantly in the early period.
By the end of the forecast period Western Europe will be the largest market for GPS-enabled mobile devices, shipping 145.8 million in 2012. This is driven by the ambitions of the handset vendors rather than operator-led services. North America remains a large market, with 113 million shipments in 2012. Asia-Pacific also remains a large market, with 106 million GPS devices shipped, but China/India is close on its heels with 100 million devices.
The clearest indicators of GPS support in future handsets are the following:
"¢ Qualcomm chipset - GPS is already an entrenched feature of a majority of Qualcomm chipset designs (which has had to support the technology widely in order to meet the US emergency services mandate) and does not accrue a significant uplift to the device bill of materials (BOM) cost due to Qualcomm's handset market share. While Qualcomm's GPS is not, as yet, always switched on by its handset OEM licensees, our enquiries suggest that activated GPS will reach near saturation in all but the lowest-end Qualcomm-based devices by the end of the forecast period. Qualcomm's domination of CDMA technology means this has a profound effect on the penetration of GPS in markets where CDMA is widespread.
"¢ High-end operating system (OS) - the desire of OEMs to make GPS data available to a range of device applications and services (there is little point in offering the capability without it) creates a close correlation between high-end OSs and GPS capability. This is especially true of Windows Mobile-based devices, where GPS is already commonplace (a large proportion of 3G Windows Mobile devices also use Qualcomm chipsets) and looks set to head for near saturation by the end of the forecast period. GPS functionality is also a key attribute for Apple's iPhone roadmap and on future Android-based devices, where much of the functionality is predicated on the availability of accurate location information. Symbian and BlackBerry OS-based devices will also feature a high penetration of GPS, the former being driven by high volumes from Nokia in particular.
Outside of these two cases, GPS integration on mobile handsets will be considerably more piecemeal and less predictable, with few OEMs canvassed able to provide a clear roadmap.
However, some pointers to adoption are available.
"¢ Nokia's intention to extend support for location awareness across its portfolio of devices based on its mid-range Series 40 platform. While Nokia expects to ship around 35 million GPS-enabled devices in 2008, the vast majority of these will have been built on its Symbian-based S60 platform. However, the company expects penetration of GPS across the handset market to ramp up at a similar rate to camera functionality and music playing capability before it - i.e. extremely rapidly.
"¢ Local devices for Japanese and Korean markets - operator demands for highly customized or bespoke handsets at the cutting edge of technology result in capabilities that are considered elsewhere to be high end achieving rapid penetration of the installed base in the Japanese and Korean markets. GPS is a clear beneficiary of this modus operandi in these countries, which also have emergency services mandates, albeit less rigorously enforced than in the US.
Tony Cripps and Michele Mackenzie, principal analysts