Maps and computers go a long way back. Rand MacNally, publisher of the Road Atlas series of driving guides, released travel planning software TripMaker for the PC in 1994. Since then, we’ve seen rapid progression of the maps and computers relationship, with websites like AOL’s (NYSE:AOL) MapQuest and then Google’s (NASDAQ:GOOG) now-ubiquitous Google Maps making the most of new technology so planning a drive and navigating is easier than ever.
What really has kicked the maps and computers connection into overdrive is mobile. With a GPS-equipped smartphone that’s always connected and always on hand (if not physically in hand), maps have become extremely important — to the point where one of the bigger tech fights in recent memory is going down behind the scenes as Apple (NASDAQ:AAPL) prepares to ditch Google Maps from its mobile devices, replacing it with its own mapping service in the forthcoming iOS 6.
Why now? Because there is money to be made in mobile mapping technology, and for Apple, the pieces finally are in place to give Google the boot.
There are roughly 316 million iOS devices out there today, and many of these are GPS-equipped iPhones and iPads. People carry these gadgets everywhere, and they use them to find everything from a decent sushi restaurant within walking distance to the nearest movie theater showing The Avengers. According to Search Engine Watch, mobile search volume is rapidly accelerating even as desktop search begins to slow. Sometime in the next three years, mobile searches should surpass desktop and are projected to just keep going.
People actively searching for products or services means ad revenue — mobile users equipped with a GPS (so their location can be pinpointed) and a map (so they can be accurately directed to a destination) means not only traditional ad revenue, but local ad revenue is in play. In the U.S., local mobile ad revenue was $784 million in 2011, but is expected to grow to over $5 billion by 2016.
Apple has been quietly assembling the necessary pieces for its own mapping service over the past few years. When the company was busted last year over location logging on its iOS devices, an official Q&A was released that included this statement:
“Apple is now collecting anonymous traffic data to build a crowd-sourced traffic database with the goal of providing iPhone users an improved traffic service in the next couple of years.”
There’s not much room for interpretation there. Apple reportedly had been at odds with Google for the past few years, sparring over licensing, features and lack of control over Google’s app. Take Apple’s public statement from 2011, then add in acquisitions such as online mapping company Placebase in 2009, Poly9 — a company that built a Flash-based Google Earth lookalike — in 2010 and Swedish 3D mapping firm C3 Technologies in 2011. The icing on the cake could well be a 2011 patent application, reported by AppleInsider, that intelligently manages movie options by incorporating not only local theater schedules, but local traffic conditions and users’ iCal appointments.
The only real question was when Apple would pull the trigger and oust Google. The Wall Street Journal is reporting that the release of iOS 6 (expected later this year) is where Apple has drawn its line in the sand and will go with its own mapping product.
When Apple flips the switch, a chunk of mobile ad revenue generated by iOS users should begin to divert from Google to Apple’s coffers. It won’t be enough to immediately cause serious damage, but given the increasing importance of mobile ad revenue, Google won’t be happy about it.
Google isn’t the only company likely to take a hit from Apple’s move into mapping, though. GPS manufacturers have seen sales of their stand-alone navigation devices slip for the past few years, even as they’ve been pressured to slash prices.
Companies like Garmin (NASDAQ:GRMN) and TomTom faced a North American market that shrunk by as much as 25% in 2011, thanks to the prevalence of GPS-equipped smartphones. They were able to make up some of that lost revenue by selling navigation apps for mobile devices (TomTom’s app for iOS goes for $59.99). But if Apple introduces its own mapping app that has decent navigation options — perhaps even integrated with Siri — along with the real-time traffic capabilities, look for demand for third-party navigation apps to tank. Especially if Apple’s version is free to iPhone users, as it undoubtedly will be.
A native mapping application for the iPhone and iPad are a certainty at this point. Apple and iOS users will be the winners. Apple will have full control over the app, will use its capabilities to further drive sales of iOS mobile devices and will increase its share of mobile ad revenue.
Users will gain a better experience (and have the option of going back to Google or a third party if they choose).
Google will lose ad revenue, likely take a search hit from iOS devices and lose visibility on Apple’s platform. And GPS makers will see their mobile app lifeline looking tenuous at best.
As of this writing, Brad Moon did not have a position in any of the aforementioned securities.