Navigation devices: The minute TomTom offered an iPhone application, the entire GPS device market took a turn for the worse. From 2006 to 2009, market-research firm iSuppli notes that personal navigation devices had a more than 2-to-1 advantage worldwide over GPS-equipped smartphones.

By the end of 2011, however, iSuppli predicts that personal navigation devices will only outnumber similarly capable smartphones 130 million to 117 million. By 2014, however, smartphones will have a nearly 160-million-unit edge on their competitors.

While NPD Group found last year that demand for in-dashboard GPD devices was nearly eight times that of their handheld counterparts, analysts note that the only separation between those devices and a smartphone is a docking-capable screen.

"Garmin has tried to make their own phone, which they weren't very successful at, so If I were Garmin, I'd be making nice, rich displays, putting my software on the iPhone and having a service behind it," Dulaney says. "If I'm carmaker BMW, I want a dedicated screen in the car that I want the iPhone to power."

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