$2.6 Billion GPS Fitness Device Market Losing Market Share to Smart Mobile Devices and Wearable Technology Products

The long time players in the GPS and location services market - in particular Garmin (News - Alert), TomTom and Magellen - have also provided over the last several years a variety of devices and GPS-enabled watches that rely on GPS to provide such things as mapping one's run (or walk or cycling route), measuring the distances covered, incorporating time to determine pace, speed and so on, and deriving a variety of fitness-related metrics from the results. For example, one can derive calories burned.

For a fairly long period of time these devices really made up the majority of the fitness device market for the more serious fitness buffs among us. In fact, London-based research firm ABI Research suggests that the overall market for these devices may reach as high as $2.6 billion by 2018.  That is a significant chunk of change and certainly a market segment the GPS vendors would love to continue to own.

Towards that goal these vendors certainly made sure to be well-represented at the recent Consumer Electronics Show held in Las Vegas early this past January. All of them had both new and updated products to demonstrate though the majority of them fall back to the core competency of these companies - GPS.

Though $2.6 billion sounds like a large-sized (if specialized) market, it is only so if the total number of players within the market remains fairly small. The smaller the number of successful players the larger the slice of pie for each of them. The problem for the GPS vendors is that smartphones and a variety of wearable technology such as activity trackers and smartwatches are not only beginning to crowd into this $2.6 billion market (we ourselves suspect the market will be larger than $2.6 billion by 2018 but the problem of decreasing pie slices remains) but these newer technologies are very likely to take over the dominant positions and leave the pure play GPS vendors on the short end of the stick.

It's an interesting conundrum. Smartphones, smartwatches and other types of wearable technology are not only at a point where they can all, for the most part, pull off what the GPS vendors have long delivered, they can now do so with equal capability while additionally delivering much more additional functionality. Smartwatches and wearable tech more often than not rely on a user also now owning a smartphone - which is certainly a highly viable assumption to make in our day and age. Leveraging the two devices is a no-brainer and creates an environment where even serious fitness buffs (who all also own smartphones) no longer need to pay premium prices for GPS vendor devices.

Increasingly Challenging Competitive Environments

Despite major GPS fitness device OEMs announcing new fitness products at CES (News - Alert) 2014 - for example, Garmin launched its Vivofit fitness band (shown below) and Vivoki/Vivahub corporate wellness solution - according to ABI's research, it looks like the GPS vendors will face an increasingly difficult battle between themselves and the smart devices and wearable tech vendors.

There are also price points to consider - wearable tech and smartwatches/smartphones are driving price points much lower than the traditional GPS vendors have settled for on their high end devices. At the high-end of the GPS fitness watch market, for example, Polar has launched a new multi-sport watch, which features a barometric pressure sensor, support for new features such as a cycling power pedal, and a high end $450 to $500 price tag (News - Alert).

Polar actually offers a wide variety of inexpensive devices, but these are all limited in functionality and are not able to hold their own with the current crop of activity trackers. Polar's new $100 Loop activity tracker is an attempt to crack the Nike Fuelband and FitBit market. Garmin's VivoFit looks to do the same, but in fact, Garmin and Polar still look to compete with each other (as they have in the past).

These are examples of the players for the fitness and wellness devices pie growing in numbers while price points drop. Smartphone, smartwatch and wearable tech devices are likely to have advantages over what the GPS vendors have relied on. In many if not most cases the older devices from the GPS vendors will simply disappear as non-competitive market offerings. The VivoFit and Loop themselves will kill the cheap end of the market, though pricing for these devices can't yet touch the old tech (we should note here that by "old tech" we literally mean devices that look out of the dark ages in many cases).

Other GPS device vendors are looking to catch up with the smartwatch vendors. For example, it is worth noting that Magallen is opening up its Echo watch platform to a range of third party smartphone application developers. And TomTom has launched an iOS application that links its current GPS watch range to an iPhone (News - Alert) via Bluetooth. Are these efforts enough to allow either company to remain major fitness vendors? We're not sure.

In ABI Research’s quarterly GPS/GNSS Device tracker (a part of ABI Research’s Location Devices Research Service), the impact of smart and wearable tech devices on dedicated GPS fitness device growth can be fully seen. Senior ABI analyst Patrick Connolly comments, "Our forecasts for the overall GPS-enabled fitness area remain strong, hitting $2.6 Billion in 2018, but as was the case with turn-by-turn navigation, converged devices and wearables will take an increasing part of the available market. The adage of keeping what we have is important here, retaining a firm eye on growth in professional users, with hardware and in particular eyewear, a major distinguisher."

There is one other thing worth noting at this juncture as far as the GPS vendors are concerned. One of the things they are now beginning to target - we noted this earlier with Garmin's Vivoki/Vivahub corporate wellness solution - is the idea of "corporate wellness" as a growing mindset that may (or may not) lead to new revenue streams for the GPS vendors. We're not sure we buy into this ourselves, though ABI notes it as a possibility.

ABI practice director Dominique Bonte says, "Of the recent announcements we've seen, Garmin’s move into corporate wellness was the most striking. What is interesting is that Garmin does not include a location element, which will be a core enabler in this sea change."

Hmm - it sounds like Garmin may not in fact have all of its ducks in a row. The smart device and wearable tech vendors strike us as having an advantage here and we would not be surprised to see the GPS vendors fade out of the market. That said, perhaps one of them will buy up a smartwatch maker or maybe transform themselves into an acquisition target.

We hear Lenovo (News - Alert) is very interested in moving much more deeply into smart devices and wearable tech. Hmm indeed.