Navigating mobile markets

AutoNavi wins big contract with Apple to supply mapping service

AutoNavi Holdings Ltd, China's No 1 navigation provider by market share, is expecting mobile Internet could drive the growth of the company in the coming years as the number of smartphone users hits nearly 300 million in the country.

"Map and navigation services on mobile devices are set to be a gateway for us to embrace mobile Internet, the next big trend in the industry," said Jiang Derong, co-founder of AutoNavi.

Although the Beijing-based company is the largest navigation device provider for automobile manufacturers and its navigation application on smartphones took nearly 40 percent of the market share, AutoNavi won fame this year when Apple Inc chose it to provide a map service to the latest operating system iOS 6 on the Chinese mainland.

Apple did not introduce its widely-criticized map service to the Chinese mainland because the company does not have the government's endorsement to do so. Analysts believe AutoNavi is likely to have a long-term deal with Apple because the United States electronic giant is not likely to get a mapping license anytime soon.

Teaming up with international giants will grant AutoNavi more opportunities to maintain its leading position in China's mapping and navigation industry, analysts said.

"Apple is going to rely on AutoNavi in the Chinese market because it does not want to see map services on mobile devices controlled by its competitor Google Inc," said Yin Jingxue, an analyst at Internet research company Analysys International. "Maps on mobile devices have become a critical platform to lure traffic to retailers because a significant amount of location-based information is shown on mobile maps."

But Yin also pointed out that if Apple senses the Chinese company becomes a threat to its location-based services, it is likely to abandon AutoNavi just like it shook off Google maps before releasing iOS 6.

Map services are a great platform for AutoNavi to tap "added value" of location-based services. It has signed deals with hotels, retailers and travel booking websites such as Ctrip.com International Ltd to provide location-based services to their customers.

"The ownership of map content and its integration with dynamic lifestyle content and local services from our vertical partners places us in a competitively advantageous position, allowing us to utilize our cloud-based map service platform to provide an enriching user experience not only to our map users but also to users of our partners' applications," said Cheng Congwu, chief executive officer of AutoNavi.

"It is impossible to estimate the exact scale of China's mobile Internet sector because virtually every traditional IT company wants to have some business in the mobile Internet sector," said Jiang Guangzhi, director of the software and IT services department at the Beijing Municipal Commission of Information and Technology. The only thing for sure is that the location-based service is booming in the nation, he added.

AutoNavi was not afraid to join hands with Apple's rivals to catch up with the boom.

The company had released map applications suitable for different operating systems such as iOS, Android, Linux and Windows, which helped AutoNavi to boost user numbers.

On Nov 16, AutoNavi announced it will install a custom-built app on Samsung Electronics Co's smart TVs.

"The cooperation with Samsung TV is a critical step for us to realize our cloud strategy. We have extended our products to automobiles, personal computers, smartphones and televisions through the cloud platform," said AutoNavi CEO Cheng.

AutoNavi was the map and navigation supplier of Samsung's smartphones. It took more than 80 percent of the market share in Android smartphones pre-installing navigation software, the company said.

The company's free mobile map application had a total of 85 million users and more than 45 million monthly active users as of the end of the third quarter. At the end of the second quarter, its user number was only 65 million and monthly active users numbered 36 million.

AutoNavi's user number is expected to reach 100 million by the end of this year, according to Cheng.

Increasing user numbers also helped Cheng and his company to experience steady revenue growth.

In the first nine months of this year, AutoNavi earned more than $116 million in net revenues, a jump of 25.8 percent year-on-year, the company said.

The company estimated that it could generate at least $152 million in net revenue, an increase of approximately a quarter on last year.