Why Garmin Should Acquire TeleNav

Why Garmin Should Acquire TeleNav
A few weeks ago, Kevin Rauckman, Garmin’s Chief Financial Officer publicly stated that his company would review the future of Nuvifone - their smartphone initiative in partnership with ASUS - within the next six months (read here).

Thus far Nuvifone – or Garminfone as it was re-branded by some carriers after the bad reviews received by the initial product – has performed poorly in terms of sales which amounted to $27 million in the second quarter of this year.

The Nuvifone plan was essentially based on a false market assumption: the fact that since GPS navigation was a highly demanded feature in smartphones, “navigation phones” would sell like hot cakes.

In addition, Garmin being a business run by former hardware engineers, a mobile initiative would essentially mean a device, not a software or a solution play.

The problem is that Smartphones do sell in numbers because they are essentially multipurpose devices (“There is an app for that” is the motto here) and not only navigation tools. In addition, when every smartphone has navigation – pre-installed or for a few euros/dollars through an app store – it is not anymore a distinctive feature.

Nokia has been also trying to sell its smartphones with a strong focus on the “turn-by-turn navigation message”; looking at the result of the Finnish company it does not seem to help a lot. As a matter of fact being a “navigation brand” such as Garmin is of no help in the smartphone business.

Garmin Nuvifone
Garmin Nuvifone
Garmin Nuvifone
Garmin Nuvifone
Would Garmin have been doing a ruggedized “sport smartphone”, it probably might have worked better because the brand has strong credentials in the sport and fitness monitoring segment. But Garmin tried to go mainstream with that phone.

Speed and size matters

In addition to that speed is of the essence in the smartphone business and the alliance between Garmin and ASUS surely does not help to churn new smartphones faster.

Second, all the big mobile companies have rushed to the smartphone segment, a place where there are still large margin to be made. In that arena Garmin – even combined with ASUS - is a very small player that lacks long standing operator partnerships and scale. Motorola, HTC, Samsung, Sony Ericsson and LG are no small competitors when it comes to Android phones.

All of that tells us that the fate of the Nuvifone is pretty much baked.

Now the big question is: what does Garmin do next in mobile?

When Garmin launched the Nuvifone they pretty much stopped all their other ongoing mobile businesses with carriers and handset makers, and have not touched to app stores as well. Now they are at minimum 18 months left behind in the new game. That essentially means if they want to execute a new mobile strategy they need to acquire some assets to jump back at full speed in the mobile navigation bandwagon.


Monday, October 11th 2010

Nav & Telematics | Sport and Outdoor | Location Based Services | Tech & Innovation | Market Data | Finance & Legal | People and Jobs | Voices of the industry | Press Releases