Garmin: Great Run, But Is That It?!

Speaking of stocks doing big runs from lows earlier this week, Google isn't alone. Fave of all GPS fan boys, Garmin is up 16% from its lows, and 7.2% today alone.

Not bad. And there is new data out today too, showing Garmin's continuing and striking dominance of the standalone GPS category. The company has 55%-plus of both the consumer and commercial GPS market, a truly impressive show of force.

But where does Garmin go from here? The bulls argue that the GPS show is barely beginning, and we will see them utterly ubiquitous, which will benefit Garmin disproportionately. Bears argue that standalone GPS's halcyon days are ending, that while location electronics will be ubiquitous, it will not be a via a standalone device, more likely via cellphones, laptops, etc.

And where am I? While Garmin's go-go days aren't yet over, I tilt strongly to the latter view. This is a classic example of where integrated devices supplant discrete devices -- with Garmin's belated foray into cellphones not doing anything to change things.

Comments

[daffy:]

be careful with the latter there, it is the technology and the technolgy/user interface that is what is valuable. Just because Garmin didn't invent the whyPhone, doesn't mean that some one won't have to rely on GRMN for tech, et cetera.

2008 Mar 12 10:01 PM

[Ames Tiedeman:]

This name can go much higher. I do not see how they have even begun to penetrate this market. There are millions of used car users who need what Garmin makes. Also, they have some new hand held units that will surely do quite well in 2009.

2008 Mar 13 05:50 PM

[Fausto:]

Do not forget that Garmin is also leader in the Professional segment where Garmin devices are still unbeatable!
I'm sure it'll do quite well even in 2008.

2008 Mar 14 06:51 AM

[Rubens Morse:]

I think Garmin is a bargain at ~13x 2008 earnings and strong growth ahead. The bears are wrong saying that stand-alone GPS devices will be dead. The place you most need a GPS device is in the car, and I can't imagine people putting their iPhones or cell phones on the dashboard to use as GPS. PNDs are highly engineered products; to make a good one you need a combination of strong GPS reception, decent user interface, good display especially in daylight, good and accurate maps. Very few firms get it right: Garmin and TomTom do, Magellan doesn't. Garmin has a 50% market share in the U.S. but penetration of GPS PNDs is less than 10%, versus almost 20% in Europe. They should grow revenues more than 40% this year despite unit prices dropping 20%.

2008 Mar 14 10:11 AM

[PVC:]

Agree with Rubens - Another continuing obstacle to convergence with cell phones is battery life - powering a cell phone, its data connection, a GPS receiver and a mapping engine is a tough proposition for a device the size of even a large smartphone - this is one reason PND features have not been broadly offered in phones even though the technological components have been available for years -This also means the nuviphone will probably end up being another dabble in the space by GRMN which will not approach blockbuster status (they have tried before), but that their core consumer PND business has fewer substitutes in the medium term than a lot of analysts would have you believe...

2008 Mar 15 05:03 PM