Garmin Smartens Up

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Better late than never, Garmin (Nasdaq: GRMN  ) -- but better still, never at all.

On Monday, the news began to filter out that Garmin is getting ready to call it quits on its failed attempt to challenge Apple (Nasdaq: AAPL  ) and Research In Motion (Nasdaq: RIMM  ) for the hearts and wallets of smartphone shoppers. According to tech reporter Digitimes, Garmin is winding down its partnership with Asustek in January. Asustek had built the "Garminfone" GPS-unit-cum-cell-phone for marketing to Deutsche Telekom subsidiary T-Mobile, but plans to return to making Asus-branded cellphones in the future. As for Garmin ... well, it's either got to find itself a new phone-making partner, or abandon this experiment as a failure.

I choose door No. 2
Fools, you know I love Garmin. I watched in wonder as the company played rival TomTom like a fiddle a few years ago, maneuvering its Euro-rival into making an ill-considered, overpriced acquisition of mapmaker Tele Atlas, while Garmin chose a more malleable licensing deal from Nokia (NYSE: NOK  ) . And yet, I've never been a fan of Garmin's decision to build a smartphone of its own.

Last month, Garmin CFO Kevin Rauckman basically admitted that Garmin may exit the cell phone business. Sales are not meeting expectations, and the company's flagship cell phone model in particular, the "Nuvifone" that Garmin began marketing through AT&T (NYSE: T  ) last year, had left the company "disappointed" with the results. Reading the writing on the wall, Rauckman foretold that "if we end up ultimately not successful," the "pragmatic" thing to do will be to call it quits.

Better sooner than later
And the quicker, the better. An unanticipated side-effect (that probably should have been anticipated) of competing with other smartphone makers is that potential licensees of Garmin GPS software such as Sony Ericsson and LG are now playing hard to get. Unhappy at the prospects of subsidizing a handset rival, they're opting to go with Garmin rivals such as Google (Nasdaq: GOOG  ) and its Android system, or even TomTom.

But this only makes Garmin's decision easier. On the one hand, anemic sales provide proof-positive that Garmin cannot compete with the big boys in the smartphone wars. On the other hand, a tactical retreat from hawking hardware may open up new possibilities for Garmin to seek out high-margin licensing revenue by placing its GPS software in the handsets of other manufacturers.

When a result is as clearly win-win as this one, there's only one smart decision for Garmin to make. Better late than never.

Fool contributor Rich Smith owns shares of Google. The Motley Fool has a disclosure policy.

Google and Nokia are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers choice. Apple is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Apple and Google.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Read/Post Comments (2) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 27, 2010, at 10:45 AM, Aeoran wrote:

    While I think that the concluding sentence is a bit of a stretch, InfoThatHelp has said something interesting here worth a bit of thought. Perhaps an aspect of reality augmentation.

  • Report this Comment On October 27, 2010, at 12:13 PM, dexter1225 wrote:

    @Aeoran - although I agree that there is something interesting in InfoThatHelp's post (for once), I'm finding it hard to understand his motives....

    InfoThatHelp - do you have a Garmin unit or Steve Jobs tattooed on your bu++...?

    @the article - If I were made of money (or just made more of it), I'd be more than willing to jump at one of those Garmin units they push toward bicyclists: the opportunity to measure altitude, distance, speed, etc... on one unit while being able to export info sounds excellent! That being said, not sure I would have ever bought their phone...

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1345849, ~/Articles/ArticleHandler.aspx, 10/25/2016 2:06:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,188.34 -34.69 -0.19%
S&P 500 2,145.87 -5.46 -0.25%
NASD 5,289.98 -19.85 -0.37%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 1:50 PM
AAPL $117.94 Up +0.29 +0.25%
Apple CAPS Rating: ****
BBRY $7.30 Down -0.05 -0.68%
BlackBerry CAPS Rating: *
GOOGL $829.42 Down -6.32 -0.76%
Alphabet (A shares… CAPS Rating: *****
GRMN $49.24 Up +0.36 +0.74%
Garmin CAPS Rating: **
NOK $4.97 Down +0.00 +0.00%
Nokia CAPS Rating: **
T $36.75 Down -0.11 -0.30%
AT and T CAPS Rating: ****