Global market forecast

From INVESaTWIKI

Global market forecast

Input information and assumptions have been combined into a comprehensive model, based on the total potential addressable market for each separate application. Market take-up is then estimated and information on current pricing and future trends is used to produce a turnover model. In view of the diversity of the overall supply chain for navigation products and services described in Figure 2 (in the previous page), forecasts are made regarding the specific segments of the market, notably:

• Net turnover: the turnover directly associated with positioning systems hardware;
• Gross turnover: the turnover associated with the entire navigation system in which the positioning system is placed.
• Service turnover: the turnover associated with GNSS based services.

This is shown in Figure 1.

Fig.1 Overall value-added chain

The overall conservative predictions for worldwide annual net product turnover until 2020 are shown in Figure 2. This model indicates a Global net turnover of € 5 billion in 2004, surging to as much as € 30 billion by 2020.

Fig.2 Annual net turnover for satellite navigation products

As depicted in Figure 3, the actual gross turnover figure in 2004 totalled € 23 billion, with predictions leading to figures as high as € 178 billion by 2020.

Fig.3 Annual gross turnover for satellite navigation products

These figures show that the market characteristics are under evolution: from an important percentage being taken by components and receivers market (basic building blocks) in 2004, it shifts towards a more mature and integrated systems market in 2020 (applications turn-key solutions).
North America, Europe and the Pacific Rim are the dominant markets for the next five years. In fact, these three markets hold in total over 60% of the Global market for the entire forecast period. However, after 2007, increased consumer spending in Central Asia and in Central and South America is expected to develop significant markets in these areas. The model incorporates assumptions about declining prices over time, which are particularly noticeable in the electronics industry. For this reason, once developed markets become saturated and sales are driven by product replacement, declining prices result in reduced overall turnover in these markets. In practice, entirely new applications and products that have not yet been envisaged are expected to stimulate future market growth.
The breakdown of net turnover by application is shown in Figure 4. The road telematics market is expected to dominate throughout the period. However there will be an important relative shift from commercial (and ‘professional’) to consumer markets, the latter being sustained by the mobile communication developments (advent of 3rd generation UMTS system, emergency services, etc.) Consumer markets account for around 40% of the total today, a figure that will rise to 75% by 2015.
A further significant development expected over this period corresponds to the growth in turnover associated with services. At present, the product market dominates turnover, and service turnover are mostly derived from the commercial fleet management market. In the consumer automotive market, navigation products can be purchased for prices below 1000 Euro and the take up of value added services is still relatively low.
However, as the number of users increase in both mass-market car and hand-held segments, the potential for service turnover also increases. Economies of scale for suppliers, maturing service offerings and network effects will all combine to increase the value of the service market.The trend is shown in Figure 4.

Fig.4 Worldwide net turnover by application in 2005 and in 2010

The current service turnover of € 7 billion represents 23% of the total market value. By 2020 service turnover will grow to € 98 billion or 35.5% of the total market value. [1]

References

[1] Galileo Joint Undertaking
"Business in satellite navigation - An overview of market developments and emerging applications".