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TomTom for iPhone Heats Up GPS App Battle

Turn-by-turn navigation is here for the iPhone, now that GPS firm TomTom's iPhone app is available in the Apple App Store.

The TomTom app costs $99.99 and uses the GPS chip inside the Apple (NASDAQ: AAPL) iPhone 3G and 3G S to provide real-time navigation to users -- essentially folding most of the features of a standalone GPS device into the smartphone.

Key features include both landscape and portrait views, points of interest and 3D and 2D maps. It also includes a signature TomTom feature called IQ Routes, which calculates the shortest way to get somewhere based on the actual road speed as determined from a database of millions of drivers. This takes into account obstacles like traffic spikes during a particular time of day when calculating arrival times and optimal routes.

First announced at the Apple Worldwide Developer's Conference, the TomTom app uses the current version of the company's mobile operating platform for the iPhone, OS 3.0, which debuted June 17.

The news comes at a time when location-based services (LBS) are emerging as a hot sector in mobile. In the U.S., revenue from LBS is expected to jump to $713 million this year from $327 million last year, according to research firm Gartner.

Worldwide consumer LBS subscribers and revenue are also on pace to double in 2009, according to Gartner's figures released in July. Despite an expected 4 percent decrease in mobile device sales, LBS subscribers are forecast to grow from 41 million in 2008 to 95.7 million in 2009, while revenue is anticipated to increase from $998.3 million in 2008 to $2.2 billion in 2009.

"The LBS industry has matured rapidly in recent months through a mixture of consolidation, improved price/performance of the enabling technologies and compelling location applications," Annette Zimmermann, senior research analyst at Gartner, said in a statement. "Factors driving the increase in the next year or so include higher availability of GPS-enabled phones, reduced prices and appearance of application stores."

Not surprisingly, the expected growth in the field has driven a number of mobile players to investigate LBS. In 2008, Finnish phone giant Nokia acquired digital map maker Navteq to boost its location-based services.

Meanwhile, Research in Motion (NASDAQ: RIMM) recently acquired Dash Navigation, known as the first U.S. vendor with a personal navigation device that included real-time traffic information generated by the Dash user community.

"The surge in interest in phone-based navigation and LBS has prompted several handset manufactures to vertically integrate these applications in their GPS handset offer," Dominique Bonte, director of telematics and navigation research at ABI Research, said in a recent report.

"Owning the Dash assets will allow smartphone vendor RIM to go one step further, offering real-time navigation or traffic content as a major differentiator," Bonte said. "It will also open possibilities to build upon Dash's open LBS platform approach based on widgets."

TomTom's not the only one looking to bridge LBS with the popular Apple iPhone, however.

Hamburg, Germany-based GPS maker Navigon recently updated its iPhone app, Navigon MobileNavigator, to 1.1.0. The initial version allows users to pull addresses from the iPhone's contact list, and with the upgrade now lets them dial a point-of-interest phone number by tapping on it.

Other new Navigon services include radar warnings and iPod integration. Right now, the app costs $69.99, but after Aug. 31, it will be the same as the TomTom app, $99.99. The current discount won't be the last enticement that Navigon offers in the arena of LBS-enabled iPhone apps.

"Navigon is committed to providing the best navigation solution for the iPhone and is constantly working on new features," Gerhard Mayr, vice president of worldwide mobile phone and new markets, said in a statement. "Our customers can expect a lot more functions to come, and spoken street names (text-to-speech) is one of the next additions that will follow soon. Of course, we are also looking into offering a powerful real-time-traffic service."