updated 12:50 pm EDT, Sat September 11, 2010
Garmin ready to halt phones soon if unsuccessful
Garmin CFO Kevin Rauckman in an interview has said the company might back out of its smartphone business within the next half a year if it can't be turned around. He acknowledged to Reuters that devices like the Garminfone and nuvifone lines had undersold in the market and that the GPS maker would 'have to make decisions" as to whether it would redouble its efforts or back out. The company managed just $27 million in revenue from smartphones during the spring, far lower than competitors; Apple produced $5.33 billion from its iPhone business in the same period.
Rauckman saw Garmin gaining share in the pure GPS space but admitted that smartphones were cutting into its business, a factor behind the decision to invest in smartphones. He estimated that Google Maps Navigation on Android, Ovi Maps and other free or potentially lower cost mobile GPS apps were costing the industry sales of five to 10 million dedicated units this year. Prices for the devices have had to drop as the technology becomes cheaper and needs to compete against smartphones, and while they might bottom out with a lack of competition, they were lower than they had been.
GPS devices would likely never get back to the peak they reached in 2008, he said.
Garmin had anticipated the effect of smartphones early and unveiled the nuvifone at the start of 2008, at the time positioning it as a counter to the iPhone that would handle GPS services Apple couldn't offer at the time. Long, repeated delays pushed the original model's US release back to late 2009, after Apple not only added GPS in 2008 but added turn-by-turn navigation support and eliminated most of Garmin's advantage. Even before the original was available in its home country, Garmin teamed up with ASUS and began shipping Windows Mobile and later Android phones.
Current models like the Garminfone have struggled in the market in part because of the lower-end hardware but also because of software; Garmin shipped its device with Android 1.6 this spring at a time when similarly-priced rivals not only had more advanced features but were shipping with Android 2.1 or later. Apple has also eliminated many of the remaining limits on its GPS and allows navigation to run in the background with iOS 4.