Is the GPS Golden Age Already Over?

by: Paul Kedrosky January 14, 2008 | about stocks: GRMN    
Paul Kedrosky

Paul Kedrosky

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GPS-maker Garmin (GRMN) is getting smoked today in the markets on news from Harman.

While I briefly owned Garmin's stock after its eons-ago IPO, I haven't held it since, much to my chagrin. Why? Because even if, as a male, I don't need directions, I understand that there others out there who do, so portable nav systems are awesome things -- and they have only gotten more awesome over time, as has been reflected in Garmin's stock rise.

Let's summarize the main non-Paul, non-industrial GPS device markets:

  • In-vehicle: heads-up nav systems for cars, etc.
  • Personal: Wearable nav devices, like Garmin's Forerunner 405
  • Recreational/outdoor: Boats, hunting, etc.

So, what is going to happen to those markets going forward? None of 'em are going away, even if they have varying respective appeal. But I am increasingly convinced that GPS-enabled cell phones -- with adequate software -- will do to standalone GPS devices what cell phones have already done to wrist watches.

I played with an LG Voyager on the weekend that does nice, live turn-by-turn directions, and something with better software -- like say, a new iPhone with functioning GPS -- would be a major short trigger for investors in incumbent GPS vendors.

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This article has 9 comments:

  •  
    Jan 14 04:02 PM
    The upcoming (probably current) recession doesn't help either.
    Reply | Link to Comment
  •  
    Jan 14 07:37 PM
    Not everyone wants to buy new cell phones.
    Screens on cell phones tend to be smaller to accommodate people's desires to get smaller and smaller communication devices. That trend doesn't exactly scale well for GPS and navigation interfaces, having a large grasp of the area is better than playing with puzzles pieces-sized mini-maps. But to some extent, I agree with you that new purchasers of cell phones will probably have a decrease in tendency to get a gps device, I'd call them every-so-often users. Many stocks have taken a similar pattern as well so it is hard to say right now, wait for verification?
    Reply | Link to Comment
  •  
    Jan 14 07:49 PM
    This is the shortest and weirdest aricle I've ever read. If you don't know anything about a subject, I would advise you perhaps not to write about it.
    Reply | Link to Comment
  •  
    Jan 14 08:42 PM
    I think you are bang on. The best sales of standalone vehicle nav. devices are behind them. Phone GPS is just going to get better and better and will also become ubiquitous. In the next few years we will see phones that use gps/galileo/glonass satellites to generate positions and also use mems for dead reckoning.
    Reply | Link to Comment
  •  
    Jan 14 11:22 PM
    You are right on. Standalone GPS devices won't disappear completely-- you'll find them in Sharper Image and Radio Shack stores--but phones will be where the action is.
    Reply | Link to Comment
  •  
    Jan 15 12:41 AM
    Garman is toast. TomTom is a better GPS and is a lot cheaper. Garman will face intense price competition and device competition from Apple, Motorola and Nokia.

    Enjoy!
    Reply | Link to Comment
  •  
    Jan 15 04:38 AM
    Harmon has a lousy gps unit so their low profits do not reflect industry. Used Garmin in Hawaii Rental Car over Christmas. Was awesome! Bought one myself and will never be without it again. It is the best GPS and their stock should not be treated like Harmon. Tom Tom is cheap and hard to use. Garmin was top Walmart GPS unit. It was sold out all over the place, I could hardly find one online. They are going to have killer sales and profits for 2008 and 2009 because they are dominating and innovating.
    Reply | Link to Comment
  •  
    Jan 15 10:17 AM
    I'm not sure I agree with the point trying to be made here. While some will choose to use this functionality on their cell phone, the majority will likely prefer a dedicated device with superior performance in its intended use over an all-in-one device that does no one thing well. Few people I know use their cell phones as mp3 players for this reason. The larger screen, voice prompts and ability to load better map detail will keep the standalone gps units in high demand.
    Reply | Link to Comment
  •  
    Mar 03 12:16 PM
    I agree with the first post: mp3-enabled phones have not decimated ipod sales nor have cell phone cameras eliminated the popularity of dedicated digi cameras. PNDs are here to stay. Consider the possibilities: taxis, package & pizza delivery, retiring and traveling boomers, rental cars, teen, pet and furlougee monitoring, aviation, marine, hunting, cycling, fitness, etc. Use your imagination re GPS and you should be able to see how important this technology is likely to become. Garmin is already doing many of these things with growth. Universal gadgets are too expensive & complicated for all but the biggest gadget heads and people would rather have dedicated, user friendly devices tailored to their preferences that can be upgraded piece meal.
    Reply | Link to Comment
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