Harman and Garmin: Is GPS’ Golden Age Already Over?

GPS-maker Garmin is getting smoked today in the markets on news from Harman, and so let me speed-post a bearish thing I had been working on over the weekend but hadn’t finished. Too bad it wasn’t out earlier, but still ….

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While I briefly owned Garmin’s stock after its eons-ago IPO, I haven’t held it since, much to my chagrin. Why? Because even if, as a male, I don’t need directions, I understand that there others out there who do, so portable nav systems are awesome things — and they have only gotten more awesome over time, as has been reflected in Garmin’s stock rise.

Let’s summarize the main non-Paul, non-industrial GPS device markets:

  • In-vehicle: heads-up nav systems for cars, etc.
  • Personal: Wearable nav devices, like Garmin’s Forerunner 405
  • Recreational/outdoor: Boats, hunting, etc.

So, what is going to happen to those markets going forward? None of ‘em are going away, even if they have varying respective appeal. But I am increasingly convinced that GPS-enabled cell phones — with adequate software — will do to standalone GPS devices what cell phones have already done to wrist watches.  I played with an LG Voyager on the weekend that does nice, live turn-by-turn directions, and something with better software — like say, a new iPhone with functioning GPS — would be a major short trigger for investors in incumbent GPS vendors.

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Comments

  1. Bill Geiser says:

    Paul,
    Don’t be too quick to short wristwatches. The watch industry has weathered many a storm for nearly 200 years.
    Will it need to adapt? You bet. It’s already started:
    http://www.sonyericsson.com/cws/products/accessories/overview/mbw-150musicedition
    / Bill

  2. Kyle S says:

    Paul – I think you pasted the wrong link up top – both links resolve to the “will cell phones replace wristwatches”.

  3. Lord says:

    Don’t worry. The cell phone industry will prevent that from ever happening.

  4. Martin Haeberli says:

    Paul,
    While I agree that better GPS on cell phones will change the market mix, I also appreciate the relative simplicity of “standalone” GPS; I need to see the satellites, but my GPS device (and whatever knowledge it has built-in) can then give me what I need without depending on also reaching, for example, the cell infrastructure.
    Another view might be that network-enhanced GPS devices; devices that can pre-fetch data, or auto-update data, via a WiFi network, or a cellular data network, when one can be reached, but otherwise functions fine, will be a new opportunity / trend. So, when I get home, my ForeRunner (new model TBD) automatically uploads my latest hike / run to the web service, perhaps gets new trail suggestions from same, etc.
    It also suggests that, just perhaps, the expensive all-in-one pricing for major map updates, such as new versions of Garmin’s MapSource, might change in two ways, one way to a small, incremental, pay-as-you-go model (e.g., I’m going to Seattle tomorrow so please get current maps), or a subscription model that creates annuities for the data providers and perhaps even the GPS platform vendors, assuming that the pricing is done right. (Or even a smart system that knows my travel plans and does the right thing).
    It will be interesting to see the demographics and pricing evolve if and as this happens.
    The theory that most GPS devices will be supplanted by cell phones seems to me as implausible as the theory that the US TV viewer base will actually learn to love their cable TV providers… :-)
    Best,
    Martin
    P.S. Query why, when with E911 and a bunch of other infrastructure, the inherent GPS / location capability of many phones, already in some cases present for years, is only now maybe being exposed and made available to the phone users?