Dylan Tweney linked to this 2009 post by venture capitalist Bill Gurley in which Gurley dissects Google’s then-recent introduction of turn-by-turn directions:
To understand just how disruptive this is to the GPS data market, you must first understand that “turn-by-turn” data was the lynchpin that held the duopoly together. Anyone could get map data (there are many free sources), but turn-by-turn data was remarkably expensive to build and maintain.
By adding turn-by-turn directions to Android, Google essentially pulled the rug out from under TomTom (which bough Tele Atlas for $2.7 billion in 2007) and Nokia (which had acquired NavTeq for $8.1 billion that same year).
Tweney states that Google’s strategy then “illuminates Apple’s maps strategy now”. Apple is now offering their users a previously “free” service for free. I use quotes there because Google’s mapping services are “free” in that you don’t pay to use them, but they still demand a price—your privacy. Location factors hugely into advertising these days, and Google is first and foremost an ad company. Apple is not.
In moving mapping in-house, Apple has killed three birds with one stone—they are no longer dependent on a competitor for a core feature, they’re denying that competitor access to valuable data, and they’re taking a stand for people’s privacy.
Gurley finishes:
Another perhaps even more important factor is that when a product is completely free, consumer expectations are low and consumer patience is high. Customers seem to really like free as a price point. I suspect they will love “less than free.”
The problem for Apple is that consumer patience at this point is low, and they’ve knocked so many out of the park that expectations are high. Fixing that imbalance will require Apple to convince users that their maps are superior. Or to actually make them so.