It’s a dog-eat-dog world out there, at least for manufacturers of portable navigation devices. Skating on razor-thin margins for devices priced as low as $200, these manufacturers face some tough challenges.

 

So what’s a navigation device manufacturer to do? One word: differentiate, differentiate, differentiate. Okay, that’s three words, but you get the point.

 

In particular, a new report from ABI Research says, these manufacturers are seeking to differentiate their higher-end, pricier products.

 

“In the near future, high-end navigation products will need increased capabilities from the hardware, better connectivity, more varied data, and more powerful functions,” ABI predicts.

Here’s another word for you: nontraditional. That’s how ABI describes the newest breed of portable navigation devices—a category that now includes  ultra-mobile personal computers and smartphones, in addition to car computers and aftermarket wireless-driven thin-client navigation systems. ABI predicts that this market will grow to almost 4 million units shipped annually by 2011.

 

Most of that growth will occur, ABI says, thanks to carriers launching high-end, GPS-enabled smartphones and other connected devices.

 

Among the changes ABI sees ahead for such devices are:

“The revenue model has yet to be sorted out,” ABI analyst Dan Benjamin notes in the ABI report. “But while TomTom, Garmin and Dash Navigation — with its ability to tie in local search — are currently leading the way in North America and Europe, with the next-generation hardware, many companies are going to be able to implement similar features.

 

Benjamin adds that a key question is how data will be delivered to portable navigation devices.

 

“There's a large amount of data that can be used to increase the usability, functionality, and experience of the device, but that data is very hard to come by,” he notes. “It’s a slow process: we need persistent data in the form of renderings of buildings, and descriptions of what’s in the streets, and we also need real-time data such as traffic information, prices, shopping, and entertainment.”

 

So here’s a tip for all those hungry-dog manufacturers out there: team up with service providers to develop better ways to deliver the navigation content consumers want, and you’ll be much more likely to eat dinner rather than be eaten.