While GPS navigation technology has slowly and somewhat painfully trickled its way into cellular handsets, the pace picked up slightly this week with Garmin
The service is based on similar features offered in one of Garmin's automobile navigation products called the StreetPilot, a popular item for which directionally challenged drivers shell out more than $500 to help them avoid getting lost all the time. It includes a database of nearly 6 million U.S. points of interest (such as restaurants and hotels), the capability to calculate the fastest route to a destination, and even turn-by-turn directions via voice commands.
Garmin has initially launched the service with Sprint Nextel
The downsides? Well, the service has been launched on just three Sprint Nextel phone models -- all from Sanyo. And $9.99 per month is not quite a mass market-friendly price. But these cons are hopefully very temporary. If Garmin can successfully introduce an easy-to-use navigation application into various handsets across more carriers and offer some stripped-down applications for, say, half the price, I believe it will capture quite a few paying customers.
Now, Garmin will not make a killing off this service -- at least not yet. The $9.99 per month will be split with Sprint Nextel, and customer uptake will be nothing like an iPod boom. But in the long term, this entry into the mobile phone space could be very significant for the company. Not only will Garmin reap a stable stream of subscription revenues, but there's also potential to turn average cell phone users on to other Garmin products. Overall, though, the No. 1 factor that will determine the success of this effort -- and positive benefits to Garmin's stock -- is how easy people find the applications to use.
I've been a big fan of Garmin's stock for years now and still consider the company to be well positioned for long-term growth in a market that is largely underdeveloped. With deep experience in mapping and navigation tools, Garmin is well suited to profitably migrate this expertise to billions of cell phone users.
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Fool contributor Dave Mock navigates cell phones with ease but leaves more complicated entrapments, such as paper bags, to experts. He owns shares of Garmin. The Motley Fool has an ironclad disclosure policy.