Garmin and TomTom: Navigating for Relevance

By Thomas Rasmussen

It’s becoming increasingly evident that once-dominant makers of personal navigation devices, such as Garmin (GRMN) and TomTom, have lost their way. They have seen billions of dollars in market capitalization erased as smartphone manufacturers have encroached on their sector, largely through M&A. Consider the most-recent example of this trend: Research in Motion’s (RIMM) acquisition of startup Dash Navigation earlier this month.

RIM’s buy is more of a catch-up move than anything else. Rival Nokia has already spent the last few years – and several billion dollars – acquiring and building a dominant presence in the location-based-services (LBS) market. And let’s not forget about the omnipresent Google. Starting with its tiny 2005 purchase of Where2, the search giant has quietly grown into a LBS powerhouse that we suspect keeps even the larger players up at night.

The Dash Navigation sale may well signal the start of some overdue consolidation, a trend we outlined last year. Specifically, we wonder about the continued independence of TeleNav, Telmap and Networks in Motion. TeleNav, for instance, is the exclusive mapping provider for the hyped Palm Pre through Sprint Navigation. But with the trend for open devices, we wonder how long that will be the case.

Comments

[GPSwatcher:]

Your article seems to reflect an uninformed opinion. Simple research shows that Garmin was the #1 provider of GPS devices in 2008, with TomTom a close second. Garmin has a diverse portfolio of products, while the PND (personal navigation device) segment has been the bulk of their revenue over the past few years, they do have other segments that allow them to sustain margins long term.
Nokia did acquire map provider Navteq, but calling them a "dominant presence" is an extreme overstatement. How many people are going to mention Nokia when asked to list GPS/LBS providers? I'm not personally aware of any Nokia devices that have consumers rushing to the store because of their LBS dominance.
Google has potential to be an LBS "powerhouse", but I don't think it is fair to give them this title just yet.
No smartphone devices are providing the same service that Garmin and TomTom provide today, so I think you are a little to quick to rule them out. I think we can also expect consumers to continue to purchase $99 PND devices vs $100 - $600 smartphones that come with high monthly service fees and can't be easily shared among a family (I wouldn't let my wife take my phone for a day trip b/c she needed navigation, but the PND isn't a necessity daily for me so it can be used by whoever inthe family needs it from day to day).

Jun 24 09:28 AM

[brewer:]

These devices are totally irrelevant if you have the iPhone, or even the iPod (and are willing to do your search from home/work before leaving (or stop at a wifi hotspot--they are everywhere now) along the way.

Jun 24 12:35 PM

[GPSwatcher:]

Remember that iPhones represent maybe 1% of worldwide cellphone sales so even if your comment was accurate that "these devices are totally irrelevant if you have the iPhone" 99% of those buying new phones worldwide choose a different device (not to mention the even greater population that isn't represented b/c they didn't purchase a new phone). I'm not saying that standalone PNDs aren't on the decline, but the vast majority of consumers don't have smartphones and aren't currently willing to pay the monthly data fees, etc so a one time $100 - $200 purchase is much more appealing than a two year $3K commitment.
The iPhone is a great product, no argument there, but it isn't as far reaching as the Applie enthusiasts (and many market "analysts") seem to think it is.

Jun 24 04:04 PM

[ZC:]

TomTom in particular have been heavily investing in relevant navigation tools making them firmly up there with the best, my new unit has mapshare, IQ routing and HD traffic, none of which are gimmicky at all, they soon sort out the 9 and 5 journeys. I dont see anybody else innovating their range like this.

I own a iPhone and still use a seperate sat nav (as does everybody else I know with a iPhone) as its much better than "maps" on the iPhone. TomTom have their one out soon for iPhone and ill consider getting it but in all honesty ill stick with my 940 which seems the dogs danglies. :)

Jul 01 04:44 AM