Garmin's Nuvifone: Why I Don't Expect It to Gain Much Traction

Mobile LBS has become a common feature and a must have on many handsets. PND makers like Garmin (GRMN) are in a difficult situation and face fierce competition from handset vendors, which is one of the reasons why Garmin has built the Nuvifone, its first GPS-centric smartphone. The problem is that Garmin has been postponing the launch of this device for months; they had to meet carriers’ technical requirements. It still expects to release its Nuvifone in 2H09 in Europe and in 4Q in North America. The Nuvifone went on sale last month in Taiwan.

The Nuvifone does not really have a real differentiator. In fact, I don't expect the Nuvifone to gain much traction. It will just be one of the many touchscreen smartphones with LBS capabilities out there. I doubt the Nuvifone can become a threat to the iPhone 3G S, the Pre, and others.

When I talked to Garmin's CFO few months ago, he was so bullish about this device. Granted, they have done a pretty good job with the Nuvifone. However, at the end of the day, the Nuvifone “might” end up being in the same situation than the Nokia (NOK) N97. Those are two pretty good devices. The problem: They might be sold at a hefty price.

Bottom line: Garmin has built a pretty nice device, but now that mobile LBS have become a common feature on many handsets, and now that the level of competition in the U.S. smartphone market has increased dramatically, it is probably too late for Garmin to become a key player in this space.

Comments

[Nextel Acce...:]

So what does this device do that all the other smart phones do not?

Aug 16 10:42 AM

[fktw:]

As far as I know, there are no smartphones that come with turn-by-turn GPS navigation, like a Garmin or TomTom PND. For the iPhone, TomTom and Navigon, for example, have released products which enables the phone to have this function. The difference of the nuvifone is that it comes standard with the Garmin navigation system with which we are all very familiar. Yes, the nuvifone might need to be priced a little higher, but you also need to pay for the add-on package from TomTom or Navigon for the iPhone. So, in the end, the consumer will need to make the choice based on the platform itself. The nuvifone G60 or M20, based on Garmin's own Linux-based OS and Windows Mobile, respectively, will probably not be able to unseat the iPhone or Pre. However, Garmin has suggested that its later phones will be Android-based. With the Android + Garmin combination, that may be one of the most powerful options for people who want a phone with navigation capability. Keep your eyes open!

Aug 16 11:55 AM

[Gadget_Guru:]

now that tom tom is pricing 194 bucks for their iphone, if u need turn-by-turn gps, ur iphone is costing 199 + 194!

Aug 16 01:47 PM

[NokiaGeek:]

On Aug 16 11:55 AM fktw wrote:
> As far as I know, there are no smartphones that come with turn-by-turn
> GPS navigation, like a Garmin or TomTom PND. For the iPhone, TomTom
> and Navigon, for example, have released products which enables the
> phone to have this function.

I have a Nokia N97. It comes with a three month license of turn-by-turn GPS navigation.

Aug 16 02:45 PM

[FreeRange:]

That may be but its a Nokia N97 which is clunky and has a horrible OS so that still makes it a bad choice.


On Aug 16 02:45 PM NokiaGeek wrote:

> On Aug 16 11:55 AM fktw wrote:

Aug 17 03:13 AM

[FreeRange:]

And your point is what? No one gives turn by turn away for free. Most current users of the service in fact buy a separate device to plug into their car, and no matter the device, you need to buy ongoing updates as guess what, roads change as communities change. You need to pay for these services - they are not free no matter what device you have or how you get your service!


On Aug 16 01:47 PM Gadget_Guru wrote:

> now that tom tom is pricing 194 bucks for their iphone, if u need
> turn-by-turn gps, ur iphone is costing 199 + 194!

Aug 17 03:16 AM

[FreeRange:]

And one more thing! You have the price wrong fool - Its only $99.


On Aug 16 01:47 PM Gadget_Guru wrote:

> now that tom tom is pricing 194 bucks for their iphone, if u need
> turn-by-turn gps, ur iphone is costing 199 + 194!

Aug 17 03:21 AM

[asusuandme:]

Great sales pitch. So how many GRMN share are you in for ? lol

Seriously....these guys have been pumping smoke up their own rear for years. If they are serious about this market they need to acquire expertise from outside of their organisation. Perhaps even consider spending some of the $1.5b cash reserve that they so proudly sit on.


On Aug 16 11:55 AM fktw wrote:

> As far as I know, there are no smartphones that come with turn-by-turn
> GPS navigation, like a Garmin or TomTom PND. For the iPhone, TomTom
> and Navigon, for example, have released products which enables the
> phone to have this function. The difference of the nuvifone is that
> it comes standard with the Garmin navigation system with which we
> are all very familiar. Yes, the nuvifone might need to be priced
> a little higher, but you also need to pay for the add-on package
> from TomTom or Navigon for the iPhone. So, in the end, the consumer
> will need to make the choice based on the platform itself. The nuvifone
> G60 or M20, based on Garmin's own Linux-based OS and Windows Mobile,
> respectively, will probably not be able to unseat the iPhone or Pre.
> However, Garmin has suggested that its later phones will be Android-based.
> With the Android + Garmin combination, that may be one of the most
> powerful options for people who want a phone with navigation capability.
> Keep your eyes open!

Aug 17 04:40 AM

[Paul Zimbardo:]

TomTom entering the iPhone below the $99 price point will put serious pricing pressure on Garmin in that sector. The fact that Garmin is trying to growth through external acquisitions only confirms my beliefs that the high-growth days are over for this company and it will never come close to regaining its glory days.

Aug 17 10:18 AM

[fktw:]

Lol...I do have a long position on GRMN, but it's not like I'm going to convince anyone in buying anything. Looking at the crystal ball in front of me, I can see Android grabbing about 30% of the smartphone market before long (which in my opinion is just the "wireless phone" market because all phones will be "smart" in the near future). It is simply because all of the major cellphone manufacturers (with the exception of Nokia) have jumped onto the Android bandwagon. In today's market, it's all about cutting cost; what better way than to use a kick ass open-source platform than to hire hundreds of developers to write your own? Eventually, smartphones will become less hardware dependent and more platform dependent. Think about computers...you either choose Microsoft or Apple...after that, you don't really care if it's HP or Dell or Acer...the same will happen to the smartphone arena.

Having said that, we all know smartphones with GPS capability will one day replace PNDs. So, looking at purely the Android market, the consumer looking for a GPS-enabled smartphone has 2 choices: 1) buy an Android phone and then buy add-on GPS capability or 2) buy a Garmin Android phone. My guess is people would choose the Garmin phone in a heartbeat. I derived this thought from some introspection. I have always been a fan of Nokia because they build the most reliable phones that have exceptional reception. However, when Android came out (and I am a bigger Google fan than a Nokia fan), I had no reservation in buying the HTC, even though I have had no experience with the brand...it's because in my mind, I was buying more an Android phone and not so much an HTC phone. This is why I'm bullish about Garmin. This will be an area where Garmin can obtain nice organic growth.

On Aug 17 04:40 AM asusuandme wrote:

> Great sales pitch. So how many GRMN share are you in for ? lol<br/>
>
> Seriously....these guys have been pumping smoke up their own rear
> for years. If they are serious about this market they need to acquire
> expertise from outside of their organisation. Perhaps even consider
> spending some of the $1.5b cash reserve that they so proudly sit
> on.

Aug 17 08:54 PM

[rd4sndk:]

Garmin has good brand awareness and is small enough that they don't need to be a major player in the handset business. My belief is that Garmin will vy for the niche logistics, highend recreational and transportation add on markets. The combination could give them 5 to 10 million annual units at an OEM cost of $400. That's a $2 to $4 billion business with greater than 50% GM. They could also pick up another 1 or 2 million units from the broader smartphone market in some select geographic areas. This business doesn't have to compete directly with the Nokias or Apples of the world to be successful to Garmin. What's wrong with high margin niche markets? Nothing.

Aug 26 11:46 AM

[Paul Zimbardo:]

@rd4sndk:

Garmin's gross margins have not be near 50% since 2006. If you investigate Garmin you will see that its financial performance and margins have been eroding quickly in the face of increased competition.

Aug 28 01:43 PM