Following the Nokia (NOK) bid for Navteq (NVT), which I openly criticized last week, rumors have been rampant that Garmin (NYSE:GRMN) will enter the cell phone business. In fact Investor’s Business Daily is putting it in print. One simple question, why would Garmin consider this move? I am baffled.
Yes, the global growth story in the cell phone market paints a rosy red glorious picture of opportunity. There is no doubt the opportunity in China and India is huge. With that, let’s revisit the bidding:
- Nokia is the market leader for the consumer segment, growing at breakneck speed globally. Nokia will likely be a big beneficiary of the global growth story into China and India.
- Research in Motion (RIMM) has become a standard in the Corporate US Market and is expanding globally.
- If the iPod is any indication, the upstart Apple (AAPL) iPhone will have an impact.
- Between Samsung, LG, Motorola (MOT), and the rest there are lots of options.
There is no doubt Garmin makes great products and they are a leader in the GPS space. They cannot lose sight of the fact that they are not without competition. Further, even if you believe in the potential opportunity, the “follow the money” approach, you have to question the direction.
As strongly as I believe Navteq is a content company, I believe Garmin is GPS Company. They both cater to a specific customer. Yes in the past they have created a GPS enabled cell phone. It is foolish to believe that this means they know what it takes to win in the cell phone space. Note to Garmin, going it alone in the cell phone market is not a sound strategy.
On the other hand, they are an attractive target. But we can save that for another debate.
