Aside from excitement related to the Olympic Games (see previous blog post), the British nation is feeling a bit sorry for itself. At the end of April 2012, it was declared to be in a double-dip recession and the unemployment rate over Q4FY11 was at its highest since 1995. Pretty grim, and this is for a nation which doesn’t always see the glass half full at the best of times.

All this has had a substantial impact on UK retail; a -2.3% slump was reported at the end of Q1FY12. The Technical Consumer Goods (TCG) market in particular was extremely disappointing (according to the latest TEMAX report (1) ). Market volume fell by -7.2% year-on-year which was the lowest Q1 turnover in the past four years. The only growth was in the IT industry, which is largely attributable to innovation.

The evolution of messaging

Since the advent of SMS messaging two decades ago, this method of communication has become a solid revenue stream for operators with over 350m SMS messages sent every day in the UK alone[1]. More recently, the rapid adoption of smartphones and the increasing demand for mobile data – which soared fortyfold in the three years leading up to 2010[1] – means a new platform has been created for ‘always-on’ instant messaging. Mobile operators are already experiencing and acknowledging a change in consumer needs with the development of high-speed, 4G networks that will enable and facilitate VoIP[2]. They will also need to brace themselves for a shift in demand towards the enhanced experience provided by mobile instant messaging services.

Personal Navigation Devices (PNDs) will still compete with smartphones for market share in the short-term. However, in the long-term, the increasingly comprehensive functionality of the smartphone, together with its ability to cater to consumers’ needs beyond simply mapping and navigation, is set to overtake PNDs.

In November 2010, GfK carried out some research which revealed that 70% of smartphone owners in the UK, Germany and France preferred to use a dedicated PND for in-car navigation rather than their smartphone. Despite this, smartphones continue to offer increasingly sophisticated mapping, navigation and location-based services – so how has this affected the PND market?

Certainly, the navigation market is not yet saturated. GfK surveyed over 1,800 respondents in the UK and the US in September 2011 and results showed that 37% owned neither a smartphone nor any kind of PND. At the other end of the spectrum, just under a fifth of respondents owned both a portable PND and a smartphone. Interestingly, owning a PND does not reduce the usage of location-based services on smartphones  - of those who own both, 91% use their smartphone for some form of mapping, navigation or location-based service.