Global Positioning Systems: Emerging Technologies and Commercial Applications

Report Highlights

• The global end-user GPS market reached nearly $12 billion in 2001 and is projected to rise to $22.9 billion in 2006 at an AAGR (average annual growth rate) of 14.6%.
• Civilian applications now dominate, comprising 96% of the market. Valued at $11 billion in 2001, this sector will grow at an AAGR of 14.9% to $22.2 billion in 2006.
• Military applications will rise from $500 million in 2001 to $700 million in 2006 at an AAGR of 7%.
• Marketers are taking advantage of the shrinking size and cost of GPS receiver technology by installing satellite-enabled navigational and timing mechanisms in everything from automobiles to cellular phones.
• While it is an increasingly commercial product, GPS applications growth is being driven by a number of governmental initiatives, such as descrambling of the former military code.

INTRODUCTION

GOALS AND OBJECTIVES OF THIS STUDY

The purpose of this report is to construct a framework for understanding the commercial implications of the Global Positioning System (GPS): its applications, its current and potential end users, and its global economic implications.

REASONS FOR DOING THE STUDY

The study was undertaken to demystify the GPS, which many continue to view through the lens of its military applications. Since its authorization for consumer use during the Clinton administration, GPS technology has begun to touch the lives of ordinary people all over the world; its potential impact - economic and ergonomic - is both vast and underestimated. This report seeks to put GPS in its proper context, as one of the most important emerging technologies of the nascent century.

AUDIENCE FOR THIS STUDY

The study was written with several audiences in mind: potential commercial end users, potential and current GPS systems manufacturers, market researchers and technologists.

SCOPE AND FORMAT

While it was initially developed for military use, GPS now is used far more widely for civilian applications, ranging from large-scale commercial (vertical) to personal, consumer (horizontal) applications.

Both the military and civilian applications of the GPS generally can be classified as either land, air, marine or so-called "timing" applications. (For purposes of this report, 'civilian' and 'commercial' are used interchangeably.)

Applications of the GPS include:

• Military:
  • Smart weapons
  • Military vehicle navigation (land, air and sea)
  • Military intelligence
• Civilian:
  • Public safety (i.e., ambulance route navigation and wireless 911)
  • Recreational vehicle navigation (land, air or marine vehicles)
  • Other recreational/gaming (such as hunting and fishing devices)
  • Automotive /intelligent vehicle navigation
  • Asset tracking
  • "Smart" agriculture
  • Mining and geological applications
  • Construction/civil engineering applications
  • Marine surveying and oceanography
  • Precision Timing (including personal locating and wireless)

This study focuses on the civilian (commercial) applications of GPS, with only a brief discussion of the military and government applications of the technology. This is because sales and market share data for the military segment is not widely available, and the military segment is significantly smaller from a unit and revenue standpoint, than the commercial segment.

The scope of this study is the projected unit and dollar sales of GPS applications (in terms of GPS units themselves and the products they are installed in).

Technical discussions have been limited to a general discussion of how GPS works, and a discussion of its three major components (the space, control, and user segments). The report seeks to break out the general, relative market impact of these three segments, with a focus on the user segment, where the bulk of commercial revenues are generated.

Where GPS revenues are quantified, the reader can assume that what is covered in the data are unit sales, rather than sales of services derived from GPS and related equipment.

The services market is nearly impossible to quantify, because often, GPS technologies are folded into other products. In these instances, the revenues derive from the sales and service contracts related to those products, rather than from the GPS itself. Other times, GPS sales are to the manufacturer, with the end user enjoying the technology without directly purchasing it, such as in GPS-enabled cellular phones, which are often "given" to consumers free of charge or at minimal cost in exchange for the consumer signing a fixed service contract. In these cases, it is nearly impossible to quantify the revenue specifically from the GPS technology, but one can quantify the revenue to the GPS OEM who sold the system to the cell phone manufacturer.

This report, therefore, focuses on unit sales and revenue, with less of an emphasis on GPS related services.

METHODOLOGY

Primary data was gathered from government, academic and commercial sources, mainly through telephone interviews and Internet research. In some cases, data was provided directly by the information source.

Projections, most of which were through 1999 or 2000, were then extrapolated through 2006 based on discussions with current commercial players in the GPS market.

Industry players from the key growth segments of the GPS market, including the telematics, wireless, vehicle tracking and other sectors, shared their market projections and insights, and these were weighed against the more conservative governmental projections.

Projections were made based on several criteria, including:

• Growth trends and performance of the commercial GPS market from 1999 through 2001, compared with historical growth trends (note that the commercial GPS market dates back only to 1996).
• Agreed-upon industry projections or averages of competing predictions.
• Growth trends within the various product markets that use, or plan to incorporate GPS, including the cellular phone, automobile and vehicle communications, asset tracking, recreational vehicle, aviation and marine markets.
• Projections by individual companies or marketers.
• Academic predictions about the GPS market.
• Government projections regarding market trends and growth.
• Trends in the overall U.S. and global economy, which could affect consumer interest in high technology and other products that use GPS.

 INFORMATION SOURCES

Primary research sources include commercial, educational and military/government sources, as well as published government and trade industry data.

Trade and government information sources include the Congressional Research Service/Science Policy Research Division, the U.S. Department of Commerce's Office of Space Commercialization (part of the Technology Administration), the International Trade Administration and the Federal Aviation Administration's Global Positioning System Product Team, and the U.S. Naval Observatory's 1994 Federal Radionavigation Plan (FRP) (prepared jointly by the Department of Defense (DoD) and the Department of Transportation (DoT)).

Academic sources included the American Institute of Physics and The Washington University Space Policy Institute. Trade and industry sources included the Satellite Industry Association, FleetBoss, Inc., SpaceDaily.com, SpaceBiz.com, gps-future.com (Lockheed Martin), Sigem, WirelessCar, Inc., Airbiquity. SUV News, and Space Daily.

AUTHOR CREDENTIALS

Joy-Ann Lomena Reid has worked as an industry analyst for over 8 years, authoring research reports on the international beverage, online banking, digital photography and other global markets.