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GPS makers battle the iPhone

The latest personal navigation devices offer lots of bells and whistles, but are they really necessary in the iPhone era?

By Michal Lev-Ram, reporter
Last Updated: August 8, 2008: 10:50 AM EDT

SAN FRANCISCO (Fortune) -- Garmin's latest GPS device, the nuvi 880, says a lot about the state of the market for portable navigation devices. The gadget has it all: directions, MP3 player for listening to songs and books, a photo viewer - even an alarm clock.

Why all the bells and whistles? Because these are tough times for GPS makers. Demand is slowing and prices are falling fast, in part due to competition from cell phone manufacturers like BlackBerry maker Research in Motion (RIMM) and Apple.

In response, GPS makers like Garmin (GRMN) are loading their devices with extras in the hopes of reigniting the torrid sales growth of years past. Curious, I decided to find out if any of these features are worth a few hundred bucks. I picked two new devices from the top GPS makers - Garmin and TomTom - and matched them up against Apple's new white-hot iPhone.

First up: The nuvi 880. The cool thing about this gadget - and what sets it apart from the competition - is its advanced speech-recognition system. Instead of having to tap directions onto a screen, the 880 lets users look up addresses or turn down the volume with their voice.

The setup was a cinch: all I had to do was attach a remote control to my steering wheel and, to get directions, push a button on the remote and start talking.

Things got a bit more complicated after that. Leaving my office in San Francisco, I first tried asking for directions to the nearby city of Palo Alto, where I live. The 880 asked me if I wanted to go to "Rialto." I tried again, this time requesting directions to "Stanford Shopping Center," which is near my home. The 880 thought I'd said "standard parking."

Sigh. Next I tried speaking louder and more clearly. The third time was the charm. It took some getting used to - the act of pressing the button and speaking clearly - but once I got it down, it was easy to use. Safer too, since I didn't have to reach over to fiddle with the device.

What about the other features? Well, I don't have much need for another alarm clock, and the picture viewer requires me to upload photos from my computer or digital camera, which is a pain. Plus, with gas prices hitting $4.33 in my neighborhood, would I shell out a whopping $1,000 just so I can talk to my GPS navigator? Nah.

Lost in music

Next I turned to the TomTom's newest navigation tool, the GO 930, which is also chock full of features but, at $500, half the price of the nuvi 880. The 930 has a fantastic user-interface with a clear and colorful display for reading maps and a decent touchscreen for entering addresses. It's also small, sleek and stylish - always an added bonus.

The 930 tries to make up for its rudimentary voice-recognition service with 3-D imagery that promises to show you not only where to turn, but also which lane to drive in while navigating through complicated interchanges. It's a great idea, but it didn't always work.

For those of us who are mindful of speeding tickets, the 930 also has a built-in warning at the bottom of the display that turns red when you're driving over the speed limit.

As for the 930's other trappings, I didn't have much use for them either. The music player conveniently lowers the volume on a song before giving voice directions, but requires that I first load my tunes. Why bother with the hassle when I can hook up my iPod to the device using a $30 cable?

One size fits all?

Since I didn't find much use for these feature-rich GPS devices, I got more excited about the prospects for the one already in my pocket: the iPhone.

Turn-by-turn directions on mobile phones is a relatively new feature with an attractive price point - about $10 a month for most handsets. Too bad the cellphone's foray into GPS navigation still has a long way to go. Most screens and keyboards are too cramped to be of any use, and GPS services tend to devour battery power.

Apple's (AAPL, Fortune 500) new iPhone 3G, however, is a step in the right direction: The phone's navigation service is free with the $200-$300 phone plus a $30 monthly data plan (GPS devices, by way of contrast, don't require a service fee). The large touchscreen allows you to easily track where you are at all times and get turn-by-turn directions to addresses and points of interest.

But even the mighty iPhone has room to improve. One big drawback: You have to tap the touchscreen each time you've made a turn in order to get the next set of directions, which isn't so easy (or safe) when you're trying to keep your eyes on the road. What's more, the directions are text-only.

In the end, just like I don't want my music to come from my TomTom, I'm not ready just yet to rely on my iPhone for directions. And when it comes to getting from point A to point B, nobody does it better than the Garmins and TomToms of the world. But they shouldn't break out the champagne just yet: Navigation on the iPhone and other cellphones will keep improving. Adding GPS functions to a phone makes a lot more sense than trying to pack a GPS device with all the features we're accustomed to having on our cell phone.

No surprise, then, that Garmin is developing a cellphone with GPS navigation. Called the nuvifone, it's due out next year.  To top of page

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