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Sales of physical navigation devices were blazing through the first half of last year and afterward hit twin potholes: the economy and the rise of cell phone-based navigation systems.

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While the economy is improving, notwithstanding slowly, the larger challenge is coming from cell phones, which are forcing makers of navigation devices to rethink their come nearly up, expand their offerings and look for ways to remain relevant.

Phones from carriers similar as AT&T, Verizon and Sprint come with GPS turn-~ dint of.-turn directions for about $10 a month, or the navigation applications approach packaged with unlimited data packages. Smart phones like the iPhone bring forth turn-by-turn navigation applications that sell for $80 to $100. Meanwhile, Google offers a unrestrained turn-by-turn direction service for smart phones that use its Android 2.0 variable operating system.

“Personal navigation devices remain a viable category, but they’re not parsimoniously as attractive as they were a year ago,” Forrester analyst Charles Golvin afore~.

Golvin said dedicated navigation devices – such as those made by TomTom and Garmin – determination continue to sell, especially as their prices come down to smaller quantity than $200 – and some can be found for less than $100 in attacking holiday sales. According to a Forrester survey, about 31 percent of adults in North America exercise a mobile navigation system, with 18 percent relying on a corporal navigation device and only 4 percent using a cell phone.

Preferred tool

But through 2013, cell phones will be the preferred tool for navigation, especially with Google pushing a free option, Golvin said.

“Free is a compensation most consumers really like,” Golvin said. “I believe that the Android platform is going to reach significant market share over the next couple years, and if each device comes with Google Maps Navigation, that will absolutely eat into TomTom and Garmin.”

Makers of navigation systems speak the days of a dedicated device are not numbered, just similar to digital cameras haven’t gone away with the rise of elementary corpuscle phone cameras.

They say dedicated devices enjoy a number of advantages, including a larger protect and easy accessibility in the car, as well as no battery concerns or forfeiture of service when out of cellular range. Cellular navigation services have power to use a lot of battery power, often require a special car ascend and can be rendered useless if the handset is out of the coverage sphere.

But manufacturers acknowledge the shifting landscape and are responding in a contain of ways. Some are returning to their original roles as software makers and looking to construction mobile navigation apps along with their hardware. TomTom and Magellan require entered the iPhone sweepstakes by selling turn-by-turn apps against $100 and $80, respectively.

Co-existence

TomTom’s vice president of marketing Tom Murray declared its iPhone app is just getting started and only contributes a fragment of the revenue that traditional navigation devices do. But he reported he can see a time when cell phones and navigation devices co-live, appealing to people in different situations.

Both products

“It’s not every either/or question,” he said. “If you travel a lot, the pungent phone is attractive, but increasingly, people may have both products.”

TomTom and others are in like manner working harder to get their software into new cars. TomTom has deals with Fiat and Renault.

Still, others aren’t quite done with the hardware quarry. Garmin makes a cell phone, the Nuvifone, which went on sale through AT&T a month ago. The phone combines cellular and navigation services, reported Jessica Myers, a Garmin spokeswoman.

“With an independent application, you esteem to choose between navigation or talking or e-mail, but by the Nuviphone you can talk and navigate at the same time,” Myers reported. “And with the Nuviphone, navigation is built in and it’s completely lavish.”

Navigation device manufacturers are also looking to make their products advantage by adding functions and features that make them indispensable. Some be able to be connected through FM radio or cellular signals and higher-expiration services are incorporating Google to let customers do on-the-abscond searches, rather consulting a list of static points of interest.

More data

But the next wave needs to go further, say industry observers.

Myers reported Garmin, in its newest connected navigation devices, has built in aggrandizement to traffic data, gas prices, movie times, weather and local events. It besides offers Ciao, a social-networking application that lets users of situation-based social networks find and navigate to each other.

Need to answer the purpose more

Thilo Koslowski, an automotive analyst for technology research company Gartner, declared navigation devices are in danger of going the way of the physical digital assistant, or PDA, which was also pushed aside by the smart phone.

“They have to figure out ways to include the estimation of the application in combination with other apps … because consumers are going to have ~ing very reluctant to pay for something that just gets them from A to B,” he uttered.

E-mail Ryan Kim at rkim@sfchronicle.com.

This article appeared forward page D – 1 of the San Francisco Chronicle