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Garmin may quit smartphones within half a year

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.



By Electronista Staff
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Comments

  1. TheBum

    Mac Enthusiast

    Joined: Sep 2001

    0

    Too long to market

    How long did it take them to get the nuvi phone to market after it was announced? I know it was at least two years, and in this business, that's an eternity.

  1. MyRightEye

    Fresh-Faced Recruit

    Joined: Apr 2008

    +2

    Software for iPhone

    That's the only hope you have of keeping your consumer business right now. And even the iPad is going to soon encroach on your aviation business.

  1. iphonerulez

    Dedicated MacNNer

    Joined: Nov 2008

    +1

    If they have to think about getting out

    it's time for them to quit. The smartphone market is totally glutted with even Microsoft getting back into the fray. It's not a business for the faint of heart and shallow pockets. The smartphone market is becoming trader play that will ruin even somewhat capable companies. Garmin isn't going to make it in the smartphone business, so they might as well give up before losing any more money. The smartphone market is only accelerating and if a company makes any mistakes for just a couple of quarters, they'll lose their shirts.

  1. George3

    Fresh-Faced Recruit

    Joined: Jul 2008

    +2

    the obvious

    They should probably create an app for the iPhone or Droid and work from that angle. I'm sure Microsoft would pay them to create an app for the Widows phone.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +4

    Garmin makes smartphones?

    One question. Why?

  1. rtbarry

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    that statement...

    should inspire plenty of confidence in your consumers and shareholders.

  1. James Katt

    Fresh-Faced Recruit

    Joined: Mar 2008

    0

    Another iPhone competitor bites the dust

    Another iPhone competitor bites the dust

  1. Jonathan-Tanya

    Fresh-Faced Recruit

    Joined: Oct 2004

    0

    Did you read the article?

    They recognized smartphones would eat into dedicated GPS sales, so they went into the smartphone market.

    Unfortunately they picked Win Mobile when that was on the wane, then switched to Android, and released a product with an old version of android.

    To compete in the cell market, they needed to do what every cell phone maker has to do - have a competitive product.

    Garmin didn't get this, and they couldn't move any product. RIM doesn't understand this, and is going to get spanked in the upcoming months. Nokia kind of gets it, but for whatever, reason is unable to change - and will also get spanked.

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