The strange GPS tracker market

Thomas Walk
Jul 24, 2017 · 4 min read

The manufacturing market for portable GPS trackers is going through a strange crunch right now. Just three years ago, the market was in a strong upward trend, with tech companies around Asia jumping into the fray to release ever smaller and more feature-packed GPS trackers, at rock bottom costs. The average consumer could get their hands on a GPS tracker that did the trick for something around US$50, no problem.

But then, sometime around September 2016, the market peaked out. Import value to the US for devices in this category plummeted after September, from US$225 million to just north of US$150 million in February 2017. That’s a 33% decrease in total value of imports in just five months. To understand why, it is important to know the differences between 2G and 3G GPS devices.

Since Turtler is in the location-sharing app space, and we are planning to introduce a GPS tracking device to go with the app, we were obviously very intrigued by these numbers. At the same time that the total value of US imports of GPS trackers was plummeting, we noticed in China a glut of cheap 2G GPS tracking devices, with dozens of companies all selling the same devices and all claiming to be the original manufacturer. Factory cost for these devices was very low, but so was our trust in the factories.

It seems the primary reason for the shake-up of the market is that countries like Japan, the US and Australia are shutting down their 2G cellular systems, and these cheap GPS trackers operate primarily on the 2G platform. 2G is good for GPS trackers because these devices send small packets of data over the cell networks; 2G has much smaller data transmission rates than 3G. Another reason 2G is good for GPS trackers is that 2G chip sets are much more energy-efficient than 3G chipsets… 3G chipsets are energy hogs. Therefore, a GPS tracker that works on a 2G network can have a much smaller battery, whereas a GPS tracker that works on a 3G network needs a bigger battery and so it will be more expensive and bigger.

Customers in the market for personal GPS trackers have a few major requirements when they are shopping around:

  1. They want a small device
  2. They want a battery that can last a day or more
  3. They want the device to work properly with GPS, A-GPS, Wi-Fi assist and on the 2G or 3G cellular network they use
  4. They want an easy-to-use app that goes with it
  5. They want it to be free of hidden costs

With the United States’ AT&T, the world’s largest telecommunications company, shutting down its 2G networks in 2017, and Australia doing the same just months before that, it’s no wonder the market is being shaken up. Importers are dropping their orders of 2G GPS trackers, and so there’s a glut of the devices at Asian manufacturers.

It seems the straightforward answer to this would be to develop small 3G-enabled GPS trackers as soon as possible and dump the 2G trackers.

But it’s not so straightforward.

As I said earlier, 3G is more of an energy hog than 2G. Therefore, if you take a 2G tracker and keep the same battery, same small case, and same design, but just switch out for a 3G chipset, you’re gonna have a device that eats through the battery charge in an instant. Nobody wants a personal tracking device that can’t last more than a couple hours. If you want the new 3G GPS device to last the same amount of time as the older model 2G device, then the battery has to be increased in capacity. Since batteries are fairly low-tech products, increased capacity means increased size, and therefore a bigger GPS tracker. Nobody wants a massive brick-sized GPS tracker. Moreover, the cost of developing these new devices is high. The cases have to be entirely retooled, equaling tens of thousands of dollars in investment, the internal guts of the machine have to be reengineered, the new devices have to be marketed, and the old devices have to be dumped. Most factories are loath to do any of this, especially since most importers are loath to order new devices that they feel customers will think are too big.

Add to that another monkey wrench into the gears: Europe is not phasing out 2G just yet. It seems unlikely that any GSM networks in Europe will be completely shut down until around 2020. In fact, many telecoms operators in Europe suggest that 2G systems may outlive 3G, which is being replaced by 4G and soon 5G. The older 2G systems, they say, are useful for legacy machine-to-machine devices, such as GPS trackers.

This all means that manufacturers of GPS trackers still have some major markets to turn to for their 2G devices, and don’t see the upside to investing in 3G devices. The market will continue to remain upside down and sideways for the near future.

Turtler

Exploring the possibilities of GPS tracking and sharing for companies, families and friends. Find out more: https://turtler.io/

Thomas Walk

Written by

Partner at Turtler GPS Ltd

Turtler

Turtler

Exploring the possibilities of GPS tracking and sharing for companies, families and friends. Find out more: https://turtler.io/

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