Satnav gadgets show way in seasonal gift sales

Personal navigation devices, the dashboard-mounted gadgets used for turn-by-turn driving instructions, are set to take the honours as the breakthrough consumer electronic gift this Christmas, according to early indications of sales.

The holiday rush caps a year that is expected to see global sales more than double from the year before, to some 30m, marking the emergence of a new mass-market category.

“It has been one of the biggest-selling categories in all of consumer electronics,” said Ross Rubin, an analyst at NPD. The firm, which tracks US retail electronics sales, is due to release figures on Monday confirming the jump in sales since the “Black Friday” start of the US holiday shopping season.

In one indication of the surge in interest, seven of the 20 biggest-selling electronic products on Amazon.com at the end of last week were navigation devices, and Wal-mart confirmed that it had seen a jump in demand for the gadgets on its own website.

Navigation devices emerged as a consumer category only after 2000, when the US government relaxed the technological restrictions that had prevented public use of its GPS satellite navigation system. Steady price falls since have brought the gadgets into the mass consumer market.

Garmin, a big US manufacturer, last month disclosed that the average price for its devices had fallen to $270, down nearly 20 per cent from a year ago.

The sales forecasts have also turned Garmin and TomTom, the Dutch company that leads the European market, into two of the hottest technology stocks. Fewer than one in five cars in the US and Europe have navigation devices, pointing to very strong sales for up to three more years, said Richard Keiser, technology analyst at Sanford C Bernstein.

In spite of the boom, concerns that price declines could spiral into a damaging price war have hung over the producers in recent months. Profit margins have already been falling, with Garmin’s operating margin slipping from 38 per cent five years ago to under 30 per cent.

So far, however, the declines have matched the typical pattern for when a new consumer electronics category goes mainstream, with rapid volume increases more than making up for falling prices, said Mr Keiser.

Additional reporting by Jonathan Birchall