updated 06:35 pm EDT, Wed October 28, 2009
Google Maps helps GPS maker stock crash
Shares of GPS device makers Garmin and TomTom plummeted today through a combination of their quarterly results and the launch of Google Maps Navigation. Following both low guidance for Garmin's next quarter as well as poor results from TomTom, shares for the two fell 16.4 percent and 20.8 percent respectively and remained low through the entire trading day after news of Google's free, turn-by-turn mapping service became public.
The declines were significantly sharper than for both the overall stock market and for Google, which lost $8.
Maps Navigation is so far ready only for Android 2.0 smartphones but is already expected to have a significant impact on sales of dedicated GPS units. While high-end GPS units often have much larger screens and other features that would be impractical for smartphones, sales of low-end mapping devices risk being cannibalized as more frugal buyers opt to use their smartphones instead. Verizon's heavy promotion of the Motorola Droid, which has a dedicated driving mode known as Car Home, is expected to spur demand for the free option; Google has already said it plans to integrate Maps Navigation into the iPhone.
Some GPS hardware producers have already tried countering the trend by releasing mobile apps for newer devices. NAVIGON, which left the US market due to competitive pressure, is one of the early iPhone app pioneers and has been quickly followed up by TomTom itself, which just last week released an iPhone car kit to match an iPhone app released earlier this year. Garmin has so far opted out of software-only and instead released its own phones, the nuvifone G60 and M20, with GPS as a central feature.