And you thought you had a bad day? Before the market open on Wednesday, Garmin reported lower than expected Q2 profit and lowered guidance for FY2008. The stock ended the day down 21% at a fresh 52 week low. And to top it off, the company delayed the Nuvifone launch to the “first half” of 2009. Ouch. We’re just barely past the first half of 2008.
“The nuvifone will not be available in fourth quarter as previously announced. While we had hoped to have carrier launches in the fourth quarter, we have found that meeting some of the carrier specific requirements will take longer than anticipated. We remain pleased with carrier interest in the device and are working toward making necessary design changes to meet their requirements. We anticipate launching the product during the first half of 2009.”
Carrier specific requirements could mean anything. Possibly issues integrating with the Nuvifone’s custom OS. Maybe the device still won’t make phone calls consistently (don’t laugh, I’ve seen this with high profile pre-launch phones before). In either case, the Nuvifone will be completely irrelevant by the time it eventually launches. The iPhone will be on its third iteration. Like many consumer electronics companies before it, Garmin is slowly realizing the numerous complexities of building a phone and working with wireless operators.
Jaty Electronics (www.jaty.co.kr) recently announced the launch of its navigation device JTNV-DR7200 for the Korean market. The unit has a handy breathalyzer feature for those late-night karaoke bar trips. What I want to know is which employee downed a beer to get the product shot of 0.02% BAC. Was that part of the job description?
Powered by a 533MHZ CPU and SiRFstar III GPS antenna, the JTNV-DR7200 also offers mountain, car, and golf GPS functionality, as well as mobile phone charger support. Other features include digital TV receiver w/picture-in-picture, multimedia player, photo viewer, FM transmitter, Bluetooth and more. For the Asian business exec who has it all.
These are the kind of specs that most wireless consumers are drooling over: touchscreen, 3G data, WiFi, integrated GPS and media player. But would you pay $499 for a Garmin Nüvifone? I didn’t think so. That’s because iPhone 3G just launched today at a $199 price tag, with all of the same features. The Nüvifone still isn’t slated to launch for another three months or so.
And when it does finally launch, it will find itself competing with a number of sophisticated GPS-enabled smartphones in addition to the popular iPhone: BlackBerry Bold, Samsung Instinct, Nokia N96 and others. The pricing pressure will be brutal.
“Getting to the viable price of $199 could involve considerable pain,” says Oppenheimer analyst Yair Reiner. At a $200 subsidy from the carrier, Garmin is likely looking at a product margin in the mid-teens, estimates Reiner. Compare that to Yankee Group’s estimate of 50% gross margin for Apple’s 3G iPhone.
Pricing aside, perhaps the biggest competitive advantage Apple has is the new iTunes App Store. Can you get SEGA’s Super Monkey Ball for the Nüvifone? Nope. Other than Garmin’s turn-by-turn software, you’re pretty much left with GyPSii, a second-rate social networking LBS app. That’s the downside of not having a developer community, as Steve Jobs discovered decades ago in the Mac/PC wars.
It’s no wonder that investors seem to have priced in a Nüvifone disaster, with GRMN trading down 56% YTD.
I guess you could call me jaded. It’s not often that a mobile application really impresses me anymore. This one did. Almotawef, which is an application for Muslim pilgrims, helps them find their relatives and groups during Hajj, walks them through the Hajj rituals and points them to the places they have to go to. I haven’t seen the app myself, but the concept is fabulous. It addresses a real consumer need and targets a specific activity. Value and utility. If I were on a pilgrimage to Mecca I would pay for this in a heartbeat. The application was developed on weNear, a new framework for location-based services.
The market has been flooded with PNDs from dozens of brands. A quick glance at GRMN shows how fast ASPs have dropped. So what’s an OEM to do? Differentiation through brand licensing, of course! Mio is launching a Knight Rider navigation unit this fall with MSRP around $270, complete with William Daniels’ KITT voice and LED bars of the original Knight Rider Pontiac Trans Am. Check out the demo video - I would actually fork over some cash for this. Lesson #1 on how to part a fool with his money.
Long time no blog. I know, I’ve been a bad boy. Last month I attended Mobile World Congress in Barcelona, the largest gathering of mobile execs (and wanna-bes) outside of next week’s CTIA. I have lots of memories of the week, from the 2-hour registration queue to the stunning Gaudi architecture to $600/night for a second-rate hotel (damn you, Federal Reserve for that exchange rate). But the most poignant moment of the event was standing in the middle of Hall 8 between the Nokia and Motorola booths. Nokia was busting at the seams with people, having just launched 4 new GPS-enabled devices: the N96, N78, 6210 Navigator and 6220 Classic. Not to mention Nokia Maps 2.0. I glanced to my left and the Motorola booth was nearly empty, a sad sight for me as an ex-Motorolan. I wandered over there and asked one of the Moto employees if they had any GPS phones, “you know, like the ones over at the Nokia booth that you can geo-tag photos with.” She made no effort to put any spin on the fact they they had absolutely no devices in that category. So I’m not entirely shocked that the company just spun out the handset division, prepping for a possible sale. But some of the recent dirty laundry is still eye-opening (Motorola insider tells all about the fall of a technology icon). As a friend recently remarked, Motorola and Ed Zander will likely soon be immortalized in an HBS case study…
Garmin made a splash last night and announced their new mobile phone. The nüvifone will feature a 3.5-inch touchscreen, internet browser, HSDPA support, Bluetooth, WiFi, camera, media player, and preloaded maps of North America and / or Europe. In addition, it houses “millions” of POIs, doles out turn-by-turn, and voice-prompted directions. Garmin has partnered with Google to integrate access to Local Search and Panoramio. But here’s the problem - the devices run Garmin’s proprietary PND OS.
As expected, there has been considerable confusion and ignorance coming from Street analysts and the media. No, this is not Garmin’s first foray into the mobile phone market (Garmin NavTalk) nor is it “the first time navigation and LBS have been put at the core of a wireless device” as an Oppenheimer note trumpeted (Nokia 6110 Navigator).
This strategy is hardly unexpected - GRMN has taken a ugly beating over the last three months because of the perceived threat of shrinking PND margins and increased competition from mobile phone manufacturers. Garmin knows they need to enter the market in a big way. But without the scale and distribution that device makers like Nokia and Samsung enjoy, does Garmin stand a chance? I think it’s likely that Apple, Nokia and HTC will eat Garmin for lunch. Keep your eyes peeled - nüvifone is expected in Q3.
With this morning’s housing numbers showing an 11% YoY decline in median home prices and a 9.6 month supply at the current sales rate, this deal raises some eyebrows. Mobile real estate listing company Smarter Agent recently closed a $6.2 million “oversubscribed” first round of funding. The round was led by private equity magnate Ira Lubert, who co-founded Lubert-Adler’s multi-billion dollar real estate fund, LLR Partners, Quaker Bio Ventures and Versa Capital. The funding will support the roll-out of Smarter Agent’s GPS real estate searches including a Homes for Sale application due to launch at the beginning of Spring. Smarter Agent has a service which lets people find houses for rent or sale near where they are when they make the enquiry—it launched on Sprint a year or so ago and gains subscription revenue though a monthly fee. It claims that over 25,000 people used the service over the summer and 35 percent placed calls to the agent/property owner.
That’s a nice-sized investment for the company and should help to get things moving. Right now they’re stagnating with just one carrier, Sprint Nextel (which happens to be bleeding to death right now). Integrating the apps with an ad model should work well. And with one third of users placing calls to owners/brokers there could be a really nice commission model there as well. It would make sense to push the app for free, although the carriers would never let that fly. I’ll bet that Apartments for Rent application will get some good traction with the foreclosure tidal wave upon us…
Finally back and recovering from the 2008 edition of the Consumer Electronics Show in Las Vegas. It’s always jarring to go straight from a nice, long holiday vacation to the CES three-ring circus. My impression of the show in one word: disappointed. Maybe the most exciting thing was that Garmin had a GPS repeater set up at their booth to get a live feed for demo devices. Or perhaps that 150″ Panasonic plasma. But isn’t this the consumer electronics show? Come on guys, that’s an ego trip, not a consumer product. And Garmin shares have fallen nearly 25% since the show began, so obviously the Street didn’t like the repeaters as much as I did. Not much new for phones either, although I liked the GPS-enabled Sony Ericsson W760. But hardly big news. Truthfully, connected devices were the theme this year. Garmin announced MSN Direct-powered PNDs like the Nuvi 780 and 880. Magellan had the Maestro Elite 5340 with Google Local Search via two-way connectivity over GPRS, but that will set you back $1300 and $40/mo. And don’t forget Dash Navigation. Last year’s big news of the show was the iPhone, but that wasn’t even at CES. So here’s some food for thought - is the CES hype too big for its own good?
O’Neill Europe is showing off their new NavJacket, a Gore-Tex jacket with an integrated navigation tool. The NavJacket is the product of a partnership between O’Neill’s Wearable Electronics Department and MyGuide. According to some O’Neill propaganda, the jacket allows you to navigate through the mountains with the help of the integrated display on the sleeve and the audio instructions in the hood (is it that annoying British female voice?). “Simply enter your desired location and let the NavJacket guide you effortlessly down the slopes.” I’m fine with getting routing for something static like streets, but for an environment as dynamic as a ski slope? Also displays your current speed, weather forecasts, and details about your route, such as distance and time. Finally, the jacket has a friend finder function, which allows you to track down buddies on the slopes. The NavJacket will be available as part of the O’Neill Fall/Winter 2008/09 collection.
With this morning’s housing numbers showing an 11% YoY decline in median home prices and a 9.6 month supply at the current sales rate, this deal raises some eyebrows. Mobile real estate listing company 
Finally back and recovering from the 2008 edition of the Consumer Electronics Show in Las Vegas. It’s always jarring to go straight from a nice, long holiday vacation to the CES three-ring circus. My impression of the show in one word: disappointed. Maybe the most exciting thing was that Garmin had a GPS repeater set up at their booth to get a live feed for demo devices. Or perhaps that 
