Why are factory navigation systems still so expensive?

Over the past year, the cost of third-party GPS navigation systems has dropped precipitously, with entry level units now starting at under $150. For that price, you can get a 3.5- to 4-inch touchscreen that comes fully loaded with maps of the entire United States. Additionally, one will likely include tens of thousands of points of interest, like restaurants and gas stations, and give you turn-by-turn voice directions as you drive. Some systems even have the ability to download traffic data that can adjust your route on the fly. One of the nice things about these third-party systems is the ability to take the GPS unit along with you after you park. Even the most expensive of these units costs under $1,000 now.

So the question is this: why does every car that comes with a navigation system as an option cost $2,000 or more? Admittedly, many of them have larger 5- to 6-inch screens and they're integrated into the dash, of course. In the case of cars like some from GM and BMW that have heads up displays, they can even put the directions out in the air in front of the driver. But given that automakers likely get the hardware for a lot less than people can buy it retail, it seems to us that nav systems from the factory are a huge profit windfall opportunity for automakers right now. Personally, the next time one of us shops for a car, we'll take a pass on the optional nav system and buy a $150 Magellan, Tom-Tom or Navigon that we can switch between cars and take on walks.