rd4sndk

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

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.

Garmin: Market Erroneously Pricing In Nuvifone Failure

Tim... You raise a good argument for investing in Garmin based on nuvifone sales but I'm not as optimistic about cell phone revenue contribution as I am in continued automotive penetration and having aero+boating GPS becoming a larger percentage of revenue. These latter markets are less competitive and are sufficiently large to continue Garmins as a growth stock. My concern is that the cell phone market is too competitive and may consume a disproportionate amount of R&D resources from the other bread and butter product lines--not to mention its the competitiveness. Selling a car phone as an automotive GPS package for the low end consumer with WIFI or Wimax as the primary broadband low cost conduit for toll and network access would be huge as well as game changing. Those locations that don't have WIFI access could then use a specialized pay as you go cell network until within WIFI range. Essencially free cell phone access.

But competing with the likes of Nokia, Apple, RIMM, Samsung, Motorola and Google is highly risky in the cut throat cell phone market.