Baidu announced on August 28, 2013 that Baidu Mobile Navigation would be free hereafter. Merely four hours later, AutoNavi, a leading map and navigation Chinese company, responded with free navigation service promptly. The war over mobile navigation market accelerated immediately.
Free is a sharp weapon to break original market structure and win market dominance. Baidu free navigation service would not only bring down B2C navigation enterprises, but also shake professional navigation market. It will affect vehicle networking in the long run.
Baidu Expands Navigation Market, AutoNavi Defends Passively
Baidu has been progressive and made a few moves on expanding mobile market in the recent, including buying 91 wireless. Baidu equals with AutoNavi in mobile map market, but AutoNavi has dominance in navigation market. Baidu just launched Baidu Navigation last year. Free navigation would infect AutoNavi in a degree, it will lose a lot of income from Navigation service. Baidu’s sacrifice is relatively small, and it can win market share fast in the short term.
Professional Navigation Might be Harmed
Navigation is a professional software which is sold together with auto navigation hardware. Due to high development cost, its business model mainly is B2B. AutoNavi was the first to offer mobile navigation app. But AutoNavi remained the service fee charging business model. This time, Baidu and AutoNavi free navigation will end the major business model of navigation manufacturers.
For professional manufacturers, if they don’t offer free apps on Android and iOS, they will suffer the loss of users. They could no longer make money from selling software. B2B market will also be affected.
Free Navigation Means the Change from Tool App to Entrance and Vehicle Networking
As a tool app, software service fee is a reasonable business model. As a free navigation service, it must make money in a different way. Baidu and AutoNavi both announced free navigation service showed navigation might become the entrance to vehicle networking. For navigation manufacturers, they are going to face several changes:
- Navigation companies have to rely on big company due to less and less income from navigation service.
- Big companies would add other apps into navigation. Nuomi, a group buy website purchased by Baidu, and LBS are the advantages of Baidu. AutoNavi is supported by Alibaba. Navigation competition might turn into an open platform competition.
- Baidu and AutoNavi will compete with vehicle networking companies.