HELSINKI A Russian satellite system is the frontrunner among several rivals that could expand the use of satnav beyond mapping and car navigation, replacing aging U.S. satellites.
Russia has been developing Glonass, its answer to the U.S.-led Global Positioning System (GPS), since 1976. Having spent $2 billion in the last 10 years, it is now in the final stages, and is expected to be fully operational late this year.
"From 2012, thanks to the launch of additional satellites in 2010 and 2011, it is likely that Glonass will provide a comparable service to GPS," said Frederic Bruneteau, managing director of Ptolemus Consulting Group.
He said Glonass will likely be the best performing technology for 2-4 years from 2014 until the launch of the European Galileo network, as GPS quality is expected to degrade.
"Glonass is now ready for prime time. However its lead will not last more than a few years," Bruneteau said.
Analysts said leading global chip makers are ready to include Glonass and other new satellite technologies from Europe, and from China and India which are working on launching their own positioning satellite networks.
Governments behind new satellites are also looking to cut their dependency on the GPS system -- operated by the U.S. Air Force -- and the dozens of new satellites to be launched will make positioning a device quicker and more exact.
Harold Goddijn, the chief executive of Dutch navigation device maker TomTom said new satellites could boost usage of positioning systems in new areas like road pricing or plane safety.
"I recognize that small incremental improvements of certain technologies can lead to a completely new deployment of these technologies. Its often the last little bit that helps you to tip the balance," Goddijn told Reuters.
Glonass's success would mark Russia's most ambitious foray into the global high-tech market and contribute to the government's goal of diversifying the economy away from the energy sector.
On Tuesday China's ZTE and Russian partner Sistema unveiled the first robust-looking navigation device using both GPS and Glonass technologies.
In July, Russia threatened to block imports of cellphones and other devices not enabled for Glonass and Prime Minister Vladimir Putin said last month the Glonass system could be installed on all cars sold in his country from 2012.
The move would hurt most Russian buyers of cellphones, while also squeezing smaller manufacturers of positioning-enabled devices.
"In the short term consumer choice would suffer," said Canalys analyst Tim Shepherd.
RISE OF NEW CHIP INDUSTRY?
For any new positioning technology to spread widely it would have to be included initially on GPS chips.
Egil Juliussen, automotive analyst at research firm iSuppli said adding Glonass technology to the GPS chips will slightly increase their costs, as these will require more memory and more computing power.
"It is important to make a market for Glonass-compatible chips. The straight forward way to do so is what Russia is doing and it should work," Juliussen said.
"As the Glonass-compatible chip volume grows, the price premium will decline and then it will make sense to use these chips if and when additional accuracy is needed in all regions," Juliussen said, adding this was likely a few years away.
Several Russian firms such as Navis, GeoStar Navigation and Sitronics, part of Sistema, are developing the chipsets, with mass production expected to start in early 2011.
(Additional reporting by Harro ten Wolde in Amsterdam; Editing by Erica Billingham)