WW-167 -- The Navigation Bubble - Who puts Japan back on the global map?

J@pan Inc presents the Wireless Watch Newsletter:

W I R E L E S S W A T C H

Commentary on the Business of Wireless in Japan

Issue No. 167
Friday October 16, 2007
Tokyo

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The Navigation Bubble - Who puts Japan back on the global map?

2007 is a year of consolidation in the navigation industry.
Nokia announced its plans to acquire Navteq, an American
mapmaker, for 8.1 billion dollar, while Dutch navigation unit
maker TomTom is willing to pay 1.8 billion euro for Belgian-
based Teleatlas, Navteq's competitor. The CEO of AND, a small
mapmaker from Holland claimed a third place in the digital
mapping world with just 2.4 million euro in revenue over the
first six months of 2007. Did he bluff to push up his share
price or was Japan deleted from his global map database?

Japan has been leading the in-car navigation industry. Maps are
a pure necessity in Japan - it is easy to get lost as streets
have no names. Most of the vehicles nowadays are sold with high-
end built-in navigation units of which the maps are supplied by
leading mapmaker Zenrin, a Kyushu-based company.

Zenrin was established in 1948 as a publisher of tourist maps
and mainly focused on its home market. It employs more than
2,000 people and has revenues of about 51 billion yen (about 430
million dollar) and 3.4 billion yen net profit (30 million
dollar) - not bad for an industry that requires lots of
investment to produce and maintain maps. Zenrin has been
expanding into the overseas markets. In China, Zenrin has opened
cartographic data processing offices in Shanghai and Shenzhen.
In Europe, the US, and Taiwan, Zenrin produces in-car navigation
software. Why is Zenrin not a global player in the digital
mapping market?

[Continued below..]

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[...article continues]

Japanese high-tech navigation makers are conservative and lack
the marketing know-how to grow their overseas market share and
strike strong alliances. Japanese in-car navigation unit makers
cannot get a foot on the ground in Europe with their high-end
navigation systems starting from 2,000 dollar that are main
stream in Japan but too expensive for the European market. Back
in the nineties, Japanese companies were also being told by the
Europeans that their color screens with nice graphical maps were
too dangerous as they would distract the drivers. It helped to
keep the Japanese out of their European market, giving less
opportunity for Zenrin to expand its base providing the software
to Japanese navigation unit makers in Europe. In the mean time,
the Europeans could improve their simple graphical user
interface to 3D color maps.

There is a striking similarity with mobile phones. The Japanese
handset makers like NEC, Mitsubishi Electric, Sharp and
Matsushita entered the European market with the first polyphonic
music phones and color screens. They tested the market with
their leading edge tech products. Besides Swedish-Japanese joint
-venture, SonyEricsson, none of the Japanese still plays a
significant role anymore outside Japan. Now, the multimedia
enabled phones are mass market products, the Japanese are
overshadowed by the Koreans, Motorola, and Nokia. It would be
wise for Zenrin to learn from the past and become more
aggressive in a market that is rapidly growing. Otherwise its
investments to create overseas maps might not be worth a lot in
the near future.

By Arjen Van Blokland

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