With portable navigation systems hanging from millions of windshields and the price point of the popular devices diving down to the $99 mark, automakers' expensive in-dash nav systems are going the way of the car phone. But with mobile-phone based navigation gaining ground – and the new 3-G iPhone expected to debut on Monday with full GPS capability – portable navs could soon face a similar fate.

Phone-based GPS navigation has been steadily gaining ground on portables. Earlier this week, Networks in Motion, the leading provider of navigation services to the top four U.S. cellular carriers, announced that the day before Mother’s Day, May 10, saw the largest spike ever in the use of navigation on mobile phones, with nearly 5 million requests.

That's a lot of drivers finding their way to mom's house. And looking at a small screen while driving.

Portable navigation has experienced phenomenal growth over the past several years, while automakers' expensive in-dash systems have been shown to increase the depreciation of a vehicle. But the use of GPS-enabled mobile phones isexpected to quadruple by 2011, and if GPS is introduced on the new iPhone, as expected, it could accelerate the shift away from portable nav systems. And as Popular Mechanics reported, leave GPS suppliers "scared %#*@-less."

Portable nav heavyweight Garmin already introduced an iPhone-like GPS phone earlier this year, and last week minor player Mio unveiled two similar GPS phones. Now, all eyes will be on Steve Jobs on Monday when the Apple Godhead is expected to unveil the iPhone 2.0 with built-in GPS at the Worldwide Developers Conference in San Francisco.

The market is ripe for it. Networks in Motion, which claims to have a 57 percent share of U.S.

revenue from navigation services offered on mobile phones, says that in early in 2007 it had less than a million paid users. Now it has more than 3 million, and in May it reached the milestone of more than 100 million monthly navigation requests.

But the biggest challenge will be how to deal with driver distraction issues in moving from the small screen of portable navs to the even smaller screen of mobile phones.

Let's see if Apple will show the way.

Photo by Flikr user Juanpg