Baidu (NASDAQ:BIDU) announced yesterday that it would offer Baidu Navigation for free ever after. The company promised today to refund the users who purchased their navigation services on both Android and iOS platforms. AutoNavi (NASDAQ:AMAP), a leading map service in China, followed suit shortly afterwards, declaring that its navigation software will also be offered for free.
These moves will undoubtedly overhaul the navigation market. Compared with dedicated navigation machines usually priced at over 300 yuan ($48.67), Baidu and AutoNavi navigation apps once priced at 30 yuan and 50 yuan respectively are much cost-effective choices. Let alone the services are free now. AutoNavi Navigation has been pre-installed or downloaded for more than 70 million times, according to financial report of the company.
The V2.0 version of Baidu Navigation added a new semantic searching feature. It also supports 3D and electronic eye navigation.
Free navigation software is an inevitable trend, according to a representative of Baidu Navigation. The market of China’s mobile map and navigation market is expected to reach 281 million yuan this year, according to iResearch report. However, the monetization models of navigation companies limit the expansion of this market.
Maybe that’s why AutoNavi’s free service plan is badly received by the stock market, which recorded a 20% slump in AutoNavi shares as of this morning. In addition, the company has already posed a 57 % drop in net profit and a 5% decline in revenue for the second quarter this year. The free service plan may further drag down the company’s performance.