The Business Case for Next-Generation Chartplotting

[hyman]

The last few years have brought huge changes in the way amateur skippers look at navigation and chart plotting. PCs can today do things that were previously only available in high end chart plotter systems with a five digit price tag. At the low end, chart plotters are cheaper than ever, but the charts they use are still proprietary and relatively expensive. On the other hand, the same charts are 5 to 10 times cheaper, when bought for use on a smartphone or tablet computer running Android or iOS. And next year will likely see the first waterproof, sunlight readable Android tablet – the Panasonic ToughPad – hitting the market at half the cost of previous seaworthy computers.

Put all this together and reasons to buy a dedicated chart plotter quickly fade away, unless you are legally obliged to have one. Why should you spend US$ 1500 on a mid-range chart plotter plus chart set if you can have an Android tablet with bigger screen, more charts to choose from, and way cheaper chart updates, for the same money? OK, I know some skippers will say they prefer real buttons to press over a pure touch-screen user interface. Some will also insist the integration of a depth sounder/fish finder is important to them. But that's about it. For the majority of hobby skippers, who don't need these bells and whistles, the Android route offers a tremendously more versatile, upgradeable and flexible system. And they get all this without the bulk, cost, and complexity of a Marine PC.

How can the makers of chart plotters emerge from this paradigm shift and still make money? They need to develop chart plotters that offer essentially the same value as a rugged tablet, plus then some. And those chart plotters need to be able to use the same cheap charts that tablets can use, because this (and only this) allows chart plotters to be a bit more expensive than they are today, without raising system cost for end users. Dedicated Android chart plotters could, for example, offer these features to justify a price tag above otherwise comparable rugged tablet offerings:

• More screen size choices
• More navigation features than the chart makers' Apps
• Some hardware buttons instead of a pure touch screen interface
• Depth sounder/fish finder integration
• Integration of live AIS, radar, and other NMEA instrumentation

Of course, some of these features are hard or impossible to implement without the chart vendors cooperating. So, let's look at their position next.

For the chart vendors, it appears to me some of them started the distribution of their dirt cheap mobile apps and charts under the assumption these would be used for planning and backup, in addition to "real" chart plotter charts. If (and as long as) that holds true, they have, indeed, created an additional revenue stream without too much investment. But if and when seaworthy tablets and/or Android chart plotters start replacing today's proprietary chart plotters, they will gradually see their primary revenue stream contract. It appears to me that chart vendors have thought about that problem in very different ways. For example, Imray and Jeppesen offer their digital charts only within proprietary iPhone/iPad Apps, not for use with other navigation software, and not on Android. Why is this important? Within their own App, they can limit functionality, and use digital rights management to keep the charts from being used in other software. And while seaworthy Android tablets are under way, no such offering exists from Apple, or is likely to appear in the foreseeable future. So, no iOS charting solution will replace serious chart plotters any time soon. To me, that looks like a containment strategy: Grab additional (albeit low margin) sales in the mobile market, but keep that market separate to prevent cannibalizing the core, high-margin chart plotter market.

But then, owners of low-end chart plotters start to complain about high chart and update prices. And there is Navionics following an entirely different route: They started the mobile charting market, and they currently have the broadest offering in that market:

• Offerings for iOS, Android and even Symbian
• Choice between their prorietary App and charts for the third-party iNavX iOS-App
• Value based pricing: Cheap for their own App, with a reasonable premium for the iNavX offering
• User supplied content: More up-to-date, more accurate charts than competitors

That sure doesn't look like containment to me: They want to set the rules for the next generation charting market; they want to take market share. In order to get that, they are taking bold steps, which seem riskier than what their competitors do. And I assume they have thought twice before going such a risk. Maybe they took that risk, because all other options they saw seemed even worse. Assuming mobile charting itself is a reality that will emerge sooner or later, they essentially had the choice of placing themselves at the forefront of this "next big thing", or waiting until some of their competitors acts in some barely predictable way. Looking at it from a cost/revenue perspective, trying to take market share makes sense: Only a small fraction of the cost is in the number of copies a vendor sells. Selling more copies can therefore compensate for a lower price per copy. It appears to me that Navionics oppines that lower chart prices are inevitable in the days of internet, rugged tablets, free Inland-ENC/S-57 charts, and pirate copies of CM93v2 charts. And I am with them. Looking at it from this perspective, trying everything they can to grab market share makes sense. A whole heck of a lot more sense in fact than what their competitors are doing. Just my $0,02 ... and, BTW: I have no affiliation whatsoever with Navionics; I don't own any of their stock etcpp.; I just happen to find their strategy way more credible than anyone else's.

In my opinion, this Navionics strategy leaves competitors in an uncomfortable situation: Their containment strategy will not work unless Navionics at some point resorts to it, too. And why should Navionics do that, assuming their current position allows them to take market share while still making money through a carefully balanced, value based pricing scheme? Prices for chart cartridges used in chart plotters will likely go down as the value gap between chart plotters and mobile charting closes. But Navionics will be affected by that no more than any of its competitors. And then Navionics can play their aces: It is the one company best prepared to compensate for that, through disproportionate additional revenue from mobile chart sales. What can Navionics' competitors do about their risk of decreasing revenues? Not much, as long as they stay with their containment strategy. Here are some strategic moves they could take from there, and respective implications:

• Cripple mobile charts to the point where they cannot be used for navigation any more. But if the current containment strategy doesn't help, how should more containment help, then? Such a move will inevitably frustrate existing customers, who got used to the current (usable, albeit not perfect) standard. Rather than moving to a higher-cost solution from the same vendor, these frustrated customers may well turn away from the respective vendor, and spend their dollars elsewhere. Bottom line: Not likely to help as long as Navionics does the opposite.
• Up the prices for mobile charting apps. Given the fierce competition between multiple chart vendors in the market, this seems unlikely to succeed, and, again, will not work at all unless Navionics follows.
• Lower the prices to grab market share (or limit Navionics' market share growth). Seems like a sure route into a cutthroat price warfare ... very risky. Given current prices, will lower prices yield any market share at all? And even if so, will it be enough to compensate for a narrow to nonexistent margin?
• Give up on the containment strategy, and take some determined steps beyond what Navionics already does. Ideally, such steps would create value that customers are willing to pay for. Follwing the success of iNavX, I could think of chart plotter Apps that have more features or support open chart formats like BSB/KAP and ENC/S-57. Or, reiterating my above suggestion, cooperate closely with companies developing the next generation of chart plotters, to make sure they run primarily on "my charts", plus combine the best of current chart plotters with the best from PC/mobile charting. The list goes on; I have mentioned just a few examples.

These are the strategies I could think of. My favorite is clear enough, I guess. Feel free to comment if you see any more...

With all this laid out, what do I expect next? Let me daringly try a time table:

• 2012 - Panasonic's ToughPad is released (OK, that one was not really daring), and finds its way into marine navigation, replacing quite a few chart plotters. Navionics will be the main supplier of charts for those, due to its superior price/value relationship.
• 2013..14 - More and more rugged tablets, featuring different sizes of sunlight-readable screens, hit the market and increase pressure on makers of dedicated chart plotters. Chart plotting software on Android and/or iOS supports the ENC/S-57 vector chart format.
• 2015..18 - Under pressure from Navionics' increasing market share, other chart vendors give up their dead-end containment strategy. A new generation of dedicated chart plotters runs the Android operating system and downloads charts from the Internet. Those charts cost about twice today's price for mobile charts. Charts as well as user content, tides, current, weather forecast etc. is automatically updated whenever WiFi is accessible, or even over the 3G or 4G mobile data network. Some features of the modular chart plotter software are not included with the base price of the chart plotter, but can be purchased & downloaded separately over the Internet (see my first list in this post for some candidates).

Of course now that I have predicted this, some of it might happen earlier, because some chart or plotter vendors may read this. If it happens that way (or close to it), remember where you have read it first. If not, just forget it...

Now, what do you think? Is my thinking reasonable? Which important aspects did I miss?

[goboatingnow]

A long piece, let me give you a more international perspective

Navionics and all such chart providers, ie CMAP, and Garmin, pay substantial royalties to national hydrographic offices and these agencies are not in any near future reducing costs, in fact in a number of countries costs are rising as governments expect these agencies to operate without tax support. This has a major effect on the cost of the resulting product. I do not believe such agencies will allow the mass market low cost approach to dominate, they haven't to date and they control the data.

It may well be that the existing marine chart plotter companies see tablets as a threat. I suspect they dont. What they are doing is making their offerings more PC/tablet like ( in fact many are just PCs underneath, ie Furuno Navnet 3D is Windows Xp, Raymarine uses Linus and BSD). No doubt they will continue to make then more PC like and possibly adopt android and or open up their interfaces ( Simrad have already stated this is what they intend to do).

Remember marine systems are in the main proprietary, for example RADAR integration and autopilot control are classic closed systems and its in no ones interest to open them. IN addition add NEMA 2K and the fact that most connected systems require proprietary setup software that again does not support open platforms. There is no evidence of a significant open systems approach to this. Currently its virtually impossible to configure and maintain a NMEA2K system without proprietary chart plotters or display heads to set up devices.

Finally , many power users, advocate mainstream, commercial tablets. The experience in PCs is that as price falls due to competition, quality suffers badly and PC and systems have poor reliability records(as does Apple stuff) Also mainstream users are suspicious of "general domestic" computing equipment on a boat. Equally such "open" systems expect users to "roll their own" and most users actually want the security of a installed and maintained system. IBM is still a massive company despite the advent of "open systems".

It worth also noting that Navionics charts are predominately for leisure use and as such often omit features found on more professional chart systems. While their approach on IOS/Android etc has been laudable, I suspect its merely a marketing strategy. They will undoubtedly not want to loose the considerable OEM business and such OEMs are not going to compete with Navionics with their own OEM Navionics charts so I suspect Navionics will differentiate their offerings and increase pricing or reduce features ( also remember the royalties to hydrographic officies). I don't foresee an inevitable downwards spiral in charts.

In fact Navionics have been moving there IOS offerings to a more real time downloadable format, requiring more internet connectivity to use the app. This if course is not available to offshore sailors( or even reliably to inshore ones). Hence I beleive Navionics charts on tablets etc will need on-line connectivity to separate products from offline use in chartplotters. Offline charts will therefore be more expensive. Offshore Internet connectivity is "light" years away as the market is tiny and will remain so. I don't believe anyone in the near or medium future would go sailing on the basis of having to maintain a Internet link all the time ( as is the case for many Iphone apps today).

The major marine electronics companies, have in recent years greatly expanded the range and scope of their "chartplotters", the correct term being MFD devices ( multi-function display). These devices now control NMEA2k networks, have audio and video jukebox integration, distributed switching etc as well as traditional marine functionality. There is no doubt they see increasing the MFDs abilities as a counter to possible Ithingy advances. Plus they cant get viruses.!!. All the big three see close systems integration as the future and are racing to ensure their proprietary systems are the most comprehensive and hence garner market share.

I suspect the main competitor worrying is Garmin, who have a proprietary chart system and many low end low cost chart plotters with limited functionality that makes them susceptible to tablet advantages. Higher systems like SIMRAD, Raymarine, Fururno ( and high end Garmin) are operating in a different market space.

I do not foresee widespread adoption of such consumer electronics on the marine space. They will remain a limited choice for certain users.

DAve ( IOS developer)

[djmarchand]

The casual, recreational boater needs the following in a chartplotter:

Low cost
Sunlight viewable screen
Decent screen size- iPad or similar
Low cost or no cost charts
Some hard buttons, but soft buttons are ok
Radar overlay integration
Low power, 12V DC supply

The forthcoming ToughPad running OpenCPN (I believe the developers are working on an Android version) or low cost Coastal Explorer and using free NOAA charts probably comes close. But radar integration will probably never come to the generic hardware with freeware market.

The next market segment is the sophisticated recreational boater who has hundreds of thousands invested in their boat and burn a lot of fuel (sport fishermen). Or the long distance cruiser. To these guys, thousand dollars worth of chartplotter/radar hardware isn't a big deal. They will always gravitate to the proprietary market. They also seem to like a lot of bells and whistles so NMEA 2000 integration with engine instruments, etc is probably essential. You probably won't find that capability in a low end, generic Pad device.

And finally there is the professional market, where price is of little object, at least the crewed yacht guys.

I am in the first catagory and use a netbook with OpenCPN with free NOAA charts and a $40 hockey puck gps for my local navigation. I would seriously consider a ToughPad when they come out, particularly if for less than $500. Although everytime I think about writing a longish message such as this with a touchscreen, I cringe.

David

[dacust]

Originally Posted by goboatingnow

...
many are just PCs underneath, ie Furuno Navnet 3D is Windows Xp, Raymarine uses Linus and BSD). No doubt they will continue to make then more PC like and possibly adopt android and or open up their interfaces ( Simrad have already stated this is what they intend to do).
....
Plus they cant get viruses.!!.
....

There's a lot of good insight and speculation going on in these posts.

But I just had to point out that you say high end systems are going to off-the-shelf OSs, but can't get viruses? If you plan on a XP machine and connect to a XP based plotter, then there is a possibility.

Also, now that it's based on XP or Linux, there is all that bloat of unneeded features.

Basically, what I am saying is that since they are changing to being based on off-the-shelf operating systems, they are loosing some of the reliability and loosing one edge they used to have over a PC or tablet solution.

-dan

[goboatingnow]

Originally Posted by dacust

There's a lot of good insight and speculation going on in these posts.

But I just had to point out that you say high end systems are going to off-the-shelf OSs, but can't get viruses? If you plan on a XP machine and connect to a XP based plotter, then there is a possibility.

Also, now that it's based on XP or Linux, there is all that bloat of unneeded features.

Basically, what I am saying is that since they are changing to being based on off-the-shelf operating systems, they are loosing some of the reliability and loosing one edge they used to have over a PC or tablet solution.

-dan

Well Furuno today is a headless windows XP system. OEMS can customise most modern operating systems to open them or not.

But yes you're right. A major risk in depending open systems is that users can load any old rubbish and compromise the integrity of the system. This is true from tablets as well and it's a major issue I suspect in slowing down such progression to open systems by the major marine companies. It will also be a major issue for users of android and iOS solutions. The user can trash the system.

Dave

[hyman]

Hi all,

tanks for your consideration and thoughtful replies. I think I agree to most of what has been said, specifically to the reservations with respect to open radar and NMEA integration, and open systems in general: Yes, the current players have little interest in opening up their radar and NMEA stuff. And yes, any really open system can be compromised by user error or malware. But then, iOS isn't really open, and any Android solution can be as open as the vendor chooses...

I also agree to the bloat of Windows based systems, and have pointed out their unnecessary complexity already in my initial post. Given all software and hardware implications of different alternatives, I put all my bets on Android.

One of the reasons that got me into speculation mode is that I have always been disappointed by low end chart plotters. They do offer all features I want software-wise, but are insatisfactory pieces of hardware with their smallish, low resolution screens. In the mid range, it gets slightly better, but then we are already talking four digit price tags. Given that, the initial cost plus the ongoing cost of updated charts turns me away. And up to this day, this implies I have to live with other, significant compromises: Hardware that is not protected against water, no sunlight-readable screen, more complex handling, to name just the most important ones. Radar and NMEA integration is not on my personal wish list, though.

My point now is that exactly this mid and low end arena will inevitably change as IPX7 smartphones and tablets hit the market. I don't buy into the argument that this will not change the game. In fact it already has, to some degree. Just how exactly it will continue is obviosly somewhat speculative.

The first point that is speculative for the low end market is when sunlight readable outdoor smartphones will appear. Given battery life implications of bright backlights they may not at all. This is why I have concentrated on the mid range, where the imminent availability of adequate hardware is no longer speculation. As for reliability, I would argue that Panasonic's Tough line isn't exactly home/office grade. But no, David, it won't be available for US$ 500 or less, not even the 7 inch model. An when did you last type in a message on your chart plotter?

Now, chart licensing is a different story. I see two directions that authorities are going in key markets: In the US, and increasingly also in Europe, charts are made available to the general public for free. Recent moves into that direction include the German, Dutch and some French Inland ENCs (no European coastal waters so far). The national hydrographic offices who follow this route tend to make sure that those public charts cannot be used to fulfil any legal chart carriage requirements. Regadless of the avaialbility of free charts, royalties that Navionics and others have to pay are likely to be different for recreational systems and professional systems fulfilling legal obligations. Since I don't know the terms, I can only speculate on how much of the mobile chart revenue is eaten up by royalties. I would assume that even at today's low prices for mobile charts, there is some margin left for the chart vendors. I don't quite see why they would sell these if that doesn't generate a profit for them. How could this be "merely a marketing strategy"? How will, if I understand "marketing strategy" correctly, the availability of mobile charts help selling more chart plotter cartridges?

I also don't see that Navionics is "moving ... to a more real time downloadable format". (If they did, that would be what I called "crippling" in my original post.) As I understand, all the contents of Gold charts is downloaded at the time of purchase, and available for offline use from then on, unlimited in time (albeit without corrections). It is some of the features that low end chart plotters can only dream of that obvioulsy require internet connectivity: Weather forecasts, the news stand, and the social media integration. I am not quite sure how their tides and currents prediction or user content integration works. But even without these, the app is quite usable, and on par with low end chart plotters.

I do agree that the marine electronics companies have no good reason to change their closed system approach in the high end, but it is obvious that their mid and low end offerings are at risk (i. e. will likely loose market share) with the changes going on. So how will they react to that? And how will independent App makers up the bar? The most obvious way for both of these players to differentiate against their competitors would be to allow the use of free BSB/KAP and ENC/S-57 charts in their respective systems. The first to usably do so is sure to get my business...

Horst

[avazquez]

There is no back. Tablets and apps will roll over traditional GPS like a freighttrain. Garmin, furuno and all others better jump in and use the technology to their advantage or they will end up like Blockbuster.

[sequitur]

Originally Posted by hyman

As I understand, all the contents of Gold charts is downloaded at the time of purchase, and available for offline use from then on, unlimited in time (albeit without corrections).

This seems to be no longer true.

I have been using the South America HD in my iPad for planning and an extra eye to my RayMarine 120. Wonderful! We are currently in Patagonia, and in preparing to cross to South Africa, I recently bought the Africa card for my RayMarine, and I also bought the Australasia HD for my iPad. While with the South America iPad purchase, the entire coverage downloaded, with the Australasia purchase, I am now required to download each separate portion of the coverage.

For me this was no problem; I was back in Vancouver at the time, and I spent a few hours selectively downloading the South African coast from Cape Town to the Mozambique Channel, across to Mauritius and Rodriguez and while I was at it, the entire western and southern coast of Australia and all of new Zealand. I have also for future planning downloaded most of the coverage of Southeast Asia and Japan.

For $40 I have access to the equivalent coverage contained in four $400 cards for my RayMarine. The iPad app allows me to have at the tip of my fingers anywhere a great resource of charts for planning, discussion and dreaming. It is great ashore, but also onboard, where I often use it as a planning input when I don't want to disturb the split-screen and overlay set-up on the chartplotter.

[nwdiver]

Originally Posted by avazquez

There is no back. Tablets and apps will roll over traditional GPS like a freighttrain. Garmin, furuno and all others better jump in and use the technology to their advantage or they will end up like Blockbuster.

Garmin is in all markets from my wrist when I run, to my car, to my boat and my plane. The marine specific guys are the one who better wakeup. I think Garmin if it sees slippage in its market share and marine is going more open source, may jump in and lead the revolution and of course supply tools for the revolutionaries.

[r.fairman]

The big player with lots of cash and geo date for the whole world is Google. google has proved in the past to give away apps purely to create more traffic. More traffic = more adsense revenue. When Google enters the marine navigation market the mobile based full featured chart plotter is a reality

At present what can a dedicated chart plotter do that
iNavx on a iPad cannot do. Waterproof it for about $60 give its 12v power supply for about $20 . why oh why do not chart plotter manufactutrs not get it. Add email, add internet add portability.

Regards

Richard

[martinjrichter]

Google Earth is a great way to plan passages. It is so detailed that in many cases you can zoom into see and measure the length of boats at the dock or see channel markers. Current weather is available and quite informative, talk about the "big picture".

It's only limitation is the neet to download data from the internet.

[avazquez]

Its just a matter of time. The apps and tablets will take over. No doubt. Just sit down and watch it happen!!

[hyman]

Hi Richard,

Originally Posted by r.fairman

At present what can a dedicated chart plotter do that
iNavx on a iPad cannot do.

Be waterproof, be sunlight readable. That's about it, but Apple won't do it, I suspect. And Apple also won't given out licenses for their iOS for others to do it. So, while iNavX appears to be the leading software, it needs to do two more things:

• Run on Android
• Work with ENC/S-57 charts (plus arbitrary BSB/KAP charts)

Horst

[David M]

Furuno Navnet is Windows CE, not XP. I have seen flash on my monitor. It has never crashed.

[avazquez]

Apple is already doing it! How many GPS apps are out there. Anyway android, apple whoever they will rule the navigation market. Thats only the tip of the iceberg.