GPS device sales explode in Q4

NPD data, just released, depict an interesting shift in consumer electronics purchases through the holiday 2007 shopping season. [The chart is courtesy of Infectious Greed's Paul Kedrosky, who has his own interesting riff on things. Click on it to enlarge.] Predictably, LCD TV sales were a big winner. Nothing terribly surprising there.

One also sees a curious drop in MP3 player sales (are you listening, Apple?) and digi-cameras. Off the cuff, I’d say the ’mobilization of everything’ trend is what’s to blame for some of that. Clearly, as photo quality improves on cell phones, and as MP3 player functionality gets embedded into such devices, we are going to see a slow erosion of standalone MP3 players and digi-cam sales due to cannibalization. Pretty soon, such standalone devices will be the exception rather than the rule for the majority of consumers. I can hear the chorus now: “What, it’s ONLY a camera!?!; What, it’s ONLY an MP3 player!?!”I am already weary of “lugging” my cigarette-pack sized camera around when my trusty Treo does a serviceable enough job for quick and dirty snaps. I fear I am not alone.

Granted, this will take some time, but I am a bit surprised to see the turndown so early in the product cycle. If this isn’t evidence of product cycle compression, I don’t know what is. 

But, by far the big surprise is how GPS sales were virtually off the chart in the most recent quarter. I have written extensively on GPS-enabled software solutions, devices, Location-Based Advertising and the like on this forum. So, clearly, I am not an impartial observer here. That said, I was taken aback at these figures. Like most people on the venture side, I see rosy device penetration forecasts in most every funding pitch having to do with GPS-enabled services. However, this data supports a lot of those scenarios in ways that are rare from an investor’s perspective. Seldom does an investor see sales figures that seem to map nicely with PowerPoint figures from an entrepreneur’s presentation.

Getting religion on Location-Based Advertising

What was only spoken about in hushed whispers but a few short years ago has suddenly taken on the dimension of a full-on evangelical rant–and none too soon. I’ve been accused — fairly, at times — of drinking a little bit too much of the Location-Based Services Kool-Aid in recent posts as I waxed poetic about the impact of the intersection of GPS and that of content, advertising and a variety of pushed, targeted services. So be it. If one is too afraid of being wrong (or, more often in this technology venture business of ours, of being early), then one can never be right.

What has been heartening to see in recent months, however, has been the ‘thought migration’ in the punditry about Location-Based Services’ rich, well-dressed cousin — Location-Based Advertising. GigaOM‘s Om Malik has a nice piece on it that bears review. As serendipity would have it, in my return commute from the office this afternoon I heard another piece on this topic on NPR, and a good discussion of the Loopt/CBS Mobile relationship in particular. If that is not indicative that this field is going mainstream, then I do not know what is. As a side note, it is probably also an indicator that if your GPS-meets-content meets advertising business model start-up has not raised capital yet, you’re probably too late.

 Stay tuned. This is starting to get interesting.

Dash: a dud? or a defining device?

OK, enough with the alliteration, but it is certainly intriguing to see how much buzz (and grumblings) I am hearing about the much bally-hooed networked GPS system just launched from Dash Navigation. The idea is a simple one and fairly obvious – decouple the promise of Web 2.0 from the browser and make that data available everywhere the user is in a format that is digestible, relevant and accurate. Dash’s approach is an interesting one: how would you like to get restaurant listings, suggestions and reviews from Yelp, or real estate data from Zillow.com, or mapping from Platial, all while behind the wheel or even while in another city? Dash will pull that information with the ease of your in-car navigation system–coffee shops, gas station locations, post offices, etc — while layering in more robust content (reviews, etc) that most in-car nav systems can only hope for. Add to that real time traffic, weather, etc. and you have a fairly compelling little travel companion.

We have been openly evangelical about the broad Location-Based Services space for some time [see an earlier post here], particularly around the convergence of GPS and various content offerings (both private labeled and user-generated), so perhaps we are an easy sell. That said, we suspect that the folks at Dash and their capable investors at Sequoia Capital and Kleiner Perkins Caufield & Byers might have their work cut for them. This is a crowded space and the sands shift fortnightly around these parts. As has been well reported by GigaOm and Venture Beat (here and here, respectively) Dash is expected to be available with a $600 price tag, plus $10-13 in monthly fees depending on the services the user signs up for. This, in a space rapidly being filled by GPS-enabled phones — with new ones launching almost daily — and by hand-held GPS devices (Tom Tom, Garmin, etc) by manufacturers that know the space well and are not likely to give up their cushy franchises without a nasty fight. While we are excited by the emergence of Dash and believe it both validates this space and ratchets up innovation in this increasingly competitive and exciting area, we will be watching closely to see how consumers will react to the seemingly high price point of the device amid clear competitive offerings that surround them.

Kayak and SideStep to merge

Travel search site Kayak has decided to acquire SideStep in a deal valued at roughly $200mm. Investors appear to intend to take the company out (go public, to the unitiated) sometime in 2008.

Both companies offer a similar solution now fairly recognizable to most anyone reasonably experienced sourcing and purchasing travel products online, although they appear to go at it differently and appeal to slightly different user bases.  Details on the deal and the attendant sound bites from the investors will be well-chronicled in the trade press soon enough, so there’s no sense in rehashing the particulars here, although props should go out to Matt Marshall and the VentureBeat crew for — if not entirely breaking the story — certainly covering it with depth and alacrity.

There will no doubt be copious amounts of handwringing and pontification in the days to come over the impact of this deal, how it was structured, the profile of the investors (some well-known, others less so), but this observer can only see this as something of a harbinger for a flurry of travel-related mergers, deals and partnering that will inevitably occur in the New Year.

Some might regard all the Doh-See-Doh’ing that will go on as some kind of perverse musical chairs among companies that will now struggle for relevance and survival in a Kayak-cum-SideStep landscape. True, to an extent. That said, I think it will be emblematic of an industry that is consolidating just as rapidly due to consumer demand for more robust solutions offering a convergence of functionality that now exist across platforms, devices and services.

Kayak and SideStep did many things well, but I consider their solution(s) as going beyond traditional travel products (airline tickets, hotels, car rentals, etc) to encompass “experiential” features and functionality that consumers are beginning to demand en masse. In time, the tendency for these two companies to lean a bit farther forward on the skis might very well end up become their compelling and sustaining value. It has been my opinion for some time that there will continue to be an increased convergence of travel products and ecommerce with travel information and experiential features such as GPS and location-based services to deliver as near a one-stop solution as can be envisioned with current technology. For a long time the “last mile” in travel has been the mile from the airport at the traveler’s destination to the hotel at which the traveler is staying. Technology in the travel space has been inarguably front-loaded. In other words, there is tons of it in the sourcing, searching, reviewing, evaluating, and purchasing of travel products from the user’s home base, but once the traveler is in his booked hotel room, he is back to relying on bulky guide books, maps, and the unqualified ‘recommendations’ of hotel concierges and shuttle drivers who might have other axes to grind and competing interests to juggle. Travel search companies that are pursuing strategies to continue to serve travelers even after the outbound flight takes off will be well-suited to competing in this increasingly competitive space and instilling the kind of customer loyalty that is almost without measure.

If anything at all, the Kayak/SideStep deal was a shot across the bow for any players that feel the current travel product search-to-checkout model is sustainable on its own. This is getting interesting…