In Japan, phones have been capable of turn-by-turn navigation for a long time. When those apps first came out, there was a lot of speculation about whether mobile phone navi would kill the standalone / built-in navigation market. The car navi folks rushed to add mobile data connectivity, so they could download the latest maps and service info to compete with the "live" services offered by the mobile phones. Accessories for mounting your phone in the car in a visible position also became available.
In the end, both devices are co-existing in the market and very few people use the phone as the primary navigation device. Reasons are: (1) Inconvenience of having to launch the app, mount the phone in the car (or kill your phone's battery), and the fact that you can't use your phone. (2) Screen size. Unlike the tiny screens on North American GPS navi units, almost all units in Japan have a 5" or 7" screen. (3) The fact that most cars already have it built in anyway.
So I predict that in North America, the GPS navi units will evolve to: (1) Larger screens, (2) Data connectivity for live updates, and (3) More specialized features and improved service quality. The competition will be good. But the standalone / built-in navi devices won't just disappear.