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Crowdsourced Navigation App Waze Takes $30 Million To Launch In China

Remember the days when GPS satellite navigation apps were one of the most expensive categories of mobile apps? Some still have premium prices: apps from TomTom, Garmin, CoPilot and Navigon still sell for between £29.99 and £39.99, although these companies have experimented with lower prices too.

They’re facing competition from a new breed of free navigation apps with an emphasis on social features and crowdsourced data. One of them, Waze, has just raised $30m (£19.1m) to launch its popular app in China and develop new features for its seven million users. Another, Skobbler, has seen its GPS Navigation 2 app downloaded more than one million times in its first week of release.

Waze is an interesting company, headquartered in Israel but with a key office in the US too. The $30m funding round came from Hong Kong investor Li Ka Shing and venture capital firm Kleiner Perkins Caufield & Byers, whose partner (and technology maven) Mary Meeker will be joining as a strategic advisor and board observer as part of the funding.

Waze draws data on roads and traffic by analysing collective data from its users, while also enabling them to actively submit reports on accidents, police traps and other blockages. The company has shown off its crowdsourced data with YouTube (NSDQ: GOOG) videos like this one for Los Angeles:

It says that it’s big in the US, France, Italy and Israel, but has also seen strong growth in Spain, Malaysia, Mexico and Brazil in recent months. The company now has seven million users across its iOS and Android apps.

Skobbler isn’t quite at that level yet, but GPS Navigation 2 has roared up App Store charts around the world since its release in early October, with the one million downloads building on the company’s 1.5 million-strong user base for its first satnav app.

The app draws on the OpenStreetMap project for regular updates to its maps, as does another of the most popular free satnav apps: Navfree. Navfree’s parent company Navmii announced in mid-September that it had more than 3.2 million users, with 1.5 million of those using the Navfree UK application alone.

Both stress the fact that as they attract more users, so the quality of the data for their maps improves, to the point where it’s good enough to make people think twice about buying one of the more expensive competitors.

The rise of these apps has certainly posed questions for the traditional satellite navigation companies, who have themselves been making the transition from in-car devices to smartphone apps. The business model for the crowdsourced and/or social apps remains fluid, though: potentially ads, potentially in-app purchases of premium features, but… well, it’s mainly still potential.

The big threat for these companies, though, is if navigation evolves into a standard feature in smartphones provided by the handset maker and/or software provider.

Google Maps Navigation already offers formidable competition on Android, and few people would bet against Apple (NSDQ: AAPL) bringing navigation in-house for iOS at some point – perhaps as part of a bigger revamp for its mapping features in iOS 6.

This article originally appeared in MediaGuardian.