Did Garmin Crash With Its Newest App?

Garmin's last attempt at battling smartphone navigation competition proves that it should stay away from the market.

Jun 19, 2014 at 10:05AM

Garmin (NASDAQ:GRMN), usually hidden in gloveboxes or center consoles, attempted to regain its space on the dashboard with a new smartphone application named Viago. The application offers guidance on which lane you should be in, speed limits and your speed, downloadable maps, and traffic information -- however, many of these features require extra payments between $5 and $20.


Source: Garmin

Will this new app help Garmin sit shotgun?

Not a chance
Based on app store reviews, Viago won't help Garmin reclaim anything but the typical yelling and anger at the GPS voice-guidance. Right now, in Apple's (NASDAQ:AAPL) App Store, Viago earns two stars out of five. In the Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Play store, it does a little better with three out of five stars.

What are customers' complaints?

As Nabeel Bhatti commented:

I used to be a big fan and customer of Garmin GPS units and purchased 3 units back in the day but after smartphones and free maps offerings like Google Maps, etc., its hard to justify spending money on things like Live Traffic/Accidents, Spoken Street Name, 3D views or downloadable Maps, etc., because all this is available for free on Google Maps.

The takeaway from many reviews is that while the features could differentiate it from Apple or Google's maps, the price isn't worth it.

Many features of Viago are already a part of Apple and Google's maps. Both already include traffic information. For Garmin's Viago, Traffic Live costs $10 until July 13, when it will double to $20. Google recently updated its maps to include its own version of lane guidance, as well as offline maps, for free as always. In Viago, lane guidance is part of the Safety Kit add-on that currently costs $10, and the downloadable Maps to Go also currently cost $10. Apple is set for a new version of its maps as it launches iOS 8, which will include public transit information. Google already includes this information, and Garmin charges $5 for its Urban Guidance add-on.

A different path
Garmin made its name with navigation, but its future business will need a different route to consumers. Its automotive segment is Garmin's lowest margin business with a 15% profit margin. In the other direction, its outdoor and fitness segments had respective margins of 41% and 35%. Automotive directions have been commoditized, and Garmin can't offer a product that's premium enough to justify charging what it needs to compete with the tech giants, who are fueled with monster profits from other businesses. Garmin also doesn't have the competitive advantage of either Apple or Google, who build the operating systems the mapping software must run on.

Garmin's Viago will hopefully be its last attempt at a pricey mobile application. There are whole other business segments for Garmin to focus on.

Garmin should get moving to compete with this upcoming Apple device
Apple recently recruited a secret-development "dream team" (hopefully a bit better than its first Apple Maps team) to build a new smart device that could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Dan Newman owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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