SiRF Results are Aligned with Predictions of the Future of the PND Product and Market

Implications: SiRF sites significantly lower sales of chips for PND devices manufactured by TomTom and Garmin. This Tier One supplier to the PND OEM's is a accurate sign of the future market for these devices. The PND product will be hit by a double whammy in the next few years. Those market factors are a reduction in consumer spending on PND's and a higher value content in automotive OEM navigation and infotainment equipment.

Analysis:      The performance that SiRF indicates for the first quarter of 2008 could be likened to the analogy of the canary in the coal mine. It is an indicator of things to come for the PND market. 
    If anyone has visited electronics or automotive shows in the last year, they might have seen concept applications of portable devices, that are positioned as original equipment from the automotive manufacturers that would render the PND obsolete. These devices, that the OEM's have designed with existing consumer electronics companies, would be handheld devices that would come as part of the original equipment of the car, perhaps integrated into a console or instrument panel. The device would be a PDA, micro computer, music device, cellular telephone, and navigation device all rolled into one unit. While in the car, the capability of the device could be tapped through the existing navigation hardware. The device would in addition, have the feature of being removable from the car and travel with the driver or a passenger. This unit would also have the built in advantage of being covered by the automotive OEM manufacturers warranty. This device is not merely concept, but is destined for application in our future automobiles.
    In addition, the navigation unit of the past is truly becoming an infotainment system. The automobile is becoming another node of the information and entertainment network. Navigation will have increasing real time capability for both convenience and for active safety. The added content of streaming video and audio, as well as access to Microsoft Office Suite applications, will assure that the OEM navigation devices are becoming an extension of the office and the home. And as this content is being added, the OEM price is stabilizing and even coming down. This is something the PND simply can't offer.
    Finally, as consumers are given more choices in electronic device capability, especially multi-purpose devices, the demand for PND will be squeezed. This content, being part of the automotive Original Equipment, in a portable device, will be the best indicator that the PND will be obsolete.
    It makes sense that TomTom and Nokia are both aligning themselves with the mapping data providers in order to position themselves for this eventual shift in hardware. Linking to the mapping providers will provide a Tier One experience platform for working with the automotive OEM's.
    I think it is also wise that SiRF is remaining cautiously optimistic with the mobile TV market. This application will also experience integration into existing OEM infotainment hardware. In other words, the consumer won't need the mobile TV, when they have one or two devices already in the vehicle that can serve as a navigation, personal computer, video, and television device.
    SiRF recognizes that the business model that represents 65% of their fourth quarter revenues is indeed shrinking. And this trend will continue. It is time for SiRF to aggressively tap other applications in infotainment, vehicle dynamics, and active safety for the chip set technology.