Something happened in the mobile turn-by-turn space a few weeks ago that didn’t get a lot of play in the news. But it was a shift that I saw as game-changing. Not a new feature or distribution channel, but a new price: sub $5.
MapQuest, in partnership with Telmap, is now selling MapQuest Navigator 5.0 to consumers through a new direct-to-consumer storefront on MapQuest.com. Customers who subscribe before December 31, 2007 can download the application directly to their handset and purchase the service for the “promotional price” of $4.99 per month for the life of the subscription. This new version is available for several Blackberry devices for Sprint, T-Mobile and AT&T customers.
At this price and with the included set of features, Mapquest Navigator might capture a new segment of customers that is not willing to pay the industry-standard $10 a month. Indeed, a poll by Harris, conducted in May and June 2007, shows that with a price set at $11.99 per month only 4 % are extremely likely/very likely to subscribe; at $8.99 they are 6% and at $5.99 it grows to 19%. (read more here). Just one question: are BlackBerry owners that price sensitive? I’m inclined to think that they’re chasing the wrong segment with price cuts. The Telmap guys are sticking with the “promotional price” story, but we all know that it’s nearly impossible to raise the price on consumers (just ask GM about their 2005 discounts). At $5/month, there’s not a lot of pie to go around: application developer (Telmap), brand (MapQuest) and content provider (Navteq). Gotta sell a lot of apps at that margin…
