TeleNav and Apple: It’s Been Real
Greg is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Once upon a time, there was a great GPS navigation company that provided great software on all kinds of different platforms. This highly successful company was named TeleNav (NASDAQ: TNAV)—okay, it still is named that—and it was the go-to company for a whole lot of customers who were excited about using their iPhones to find their way wherever they were going. For just ten bucks a month, users could pull their stand-alone navigators off their windshields and use their phones instead. TeleNav was very happy.
By establishing itself as the preferred GPS navigation app creator among Apple (NASDAQ: AAPL) iPhone users, TeleNav did very well for itself indeed. The numbers speak for themselves: On Oct. 28, 2010, shares sold for just under five dollars apiece. On July 20, 2011, that number had gradually risen to break 22 dollars.
Of course, there were other GPS developers eager to cash in on the iPhone/iPad explosion. AT&T (NYSE: T) offers the highly regarded AT&T Navigator for the same monthly price as TeleNav’s software, but it isn’t compatible with the iPad—just the iPhone. TomTom (NASDAQOTH: TMOAF.PK), one of the other major players in the navigation market, is another competitor, charging a one-time fee of $50.00 rather than a monthly subscription. But TeleNav enjoyed the lion’s share of revenue from Apple fans, gaining an estimated 70 percent of its profit from Sprint and AT&T customers.
You may have noticed that this story has been in the past tense. That’s because something happened in early June to change the picture dramatically for TeleNav. Apple finally announced that it has developed its very own Maps software, incorporating all the intuitive, cutting-edge, attractive Apple-ness that we’ve grown used to. So, a fierce competitor for TeleNav? Not exactly. Here’s the really unfortunate part for TeleNav: Apple is going to provide its beautiful, easy-to-use Maps application free with iOS 6. Anyone interested in spending ten dollars a month for another program now?
Apparently not. The day after Apple’s announcement, TeleNav stock dropped seven percent. Of course, the other navigator developers also stand to lose quite a bit of business from iPhone and iPad users, but TeleNav is the one in the deepest trouble by far, since such a high percentage of its profit came from iPhone navigation junkies.
Remember that 22-dollar high mark for TeleNav’s stock? On the other side of that high mark was a huge drop, inspired by negative earning reports. The price has continued to fall since then, so this summer’s seven-percent drop couldn’t be more unwelcome.
It’s been real, TeleNav. But we’re already taking virtual trips to Istanbul with Apple’s Flyover feature and enjoying 3D buildings along with our turn-by-turn directions.
TeleNav officials can take comfort in the fact that their stand-alone GPS navigator market is still relatively strong. But look out—rumors suggest that Apple is working on its own incursion onto that area as well. Any chance their efforts will be poorly designed and not really capable of competing with TeleNav? Don’t count on it.
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