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Poor Indian Sales Force Sygic To Release Navigation App For Free

Screen Shot 2013-09-23 at 5.22.24 PM

App developers are struggling to make money in India because of low credit card penetration, according to Michael Stencl, CEO of maps provider Sygic, which has now dropped the $5.58 fee to download its GPS navigation app. As Indian Android owners remain reluctant to purchase apps, mapping providers are turning to features such as offline availability to compete with Google, which has grown in stature since launching turn-by-turn navigation and live traffic updates for Indian smartphone users last year.

Stencl told TechCrunch it was forced to eliminate the fee for the Android version of the Sygic India: GPS Navigation app because of low daily sales in India (~$250 a day) — about a sixth of sales in the United States (>$1,500 a day). Meanwhile, Sygic’s iPhone app, which also uses data from local digital cartographer MapmyIndia, still costs a prohibitive $27.99.

“Our Sygic & MapmyIndia app has been one of the most succesful and top grossing in India on Google Play, but India still has a very low penetration of credit cards, which makes it difficult to monetize there successfully,” Stencl said.

“In order to maintain a competitive marketshare, we have decided to make our app free, and wait until the market in India is more developed.

“Over the past four years, Sygic has witnessed revenue growth of nearly 250%, and we feel that by continuing to invest development resources in key geographies like India, and maintaining a customer focused strategy, we will be able to extend our leadership position globally.”

While Indians downloaded 150 millions apps from the Google Play store by October 2012, only 0.5% of customers paid to downloads these apps, according to the recent “India’s mobile internet 2013” report by Avendus Capital. The average price was just over $1, and Avendus estimates the Google Play store sold about $2 million worth of apps this year. However, the report predicts that the Indian app market will grow five-fold by 2016, to be worth about $30 million.

India’s credit card adoption languishes at around 20%, according to a 2012 HSBC report, but credit spending could pick up in the future as more cards have been issued in recent years.

Sygic’s new free app also works offline, which is a useful feature in a country where the network coverage is sporadic as you move around the city and into the rural areas. TomTom recently released a local version of its Android navigation app, which costs about $30, and also works offline. It also allows users to search for a location based on a nearby landmark or point-of-interest (this is the most popular, and usually the most accurate, way to get around cities in India). So far the TomTom app has been downloaded between 10 and 50 times, compared to over 10,000 downloads for the Sygic app. It’s still a far cry from Sygic’s 30 million global downloads.

The offline availability is a key differentiator from incumbent Google, which is increasingly integrating Waze’s social navigation and traffic data into the Maps apps, following the search engine giant’s recent $1 billion acquisition of the Israeli startup.

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