Friday, December 17, 2010


Whither, Garmin?

Garmin is a venerable player in the niche high-end marine and aviation markets. The company entered public awareness with the end of selective availability May 1, 2000 and the launch of the original eMap device - the first usable, consumer handheld GPS device capable of displaying a map.

Selective availability describes the randomization of GPS data to a radius of 300ft. With a stroke of a pen, Bill Clinton improved civilian GPS accuracy to approximately 65ft. This provided location data of sufficient accuracy not only for navigating the skies and the oceans but also for finding your way about winding, confusing trails and suburban roads. And the eMap was the only way to do so.

Demand for the eMap proved so fierce that the device re-sold at 5x MSRP for some months after its release. The Wall Street Journal published an article about it - Garmin had finally made it big. Building on its success, Garmin released the sleek eTrex series and went public in a successful IPO. Garmin's disciplined focus on positive revenue, developing its proprietary technologies, and subtely improving its offerings year after year ensured that the its stock rose steadily in value, although not impressively. Observers of the company noted an important trend: Garmin products built on 3rd part operating systems flopped badly, while Garmin's proprietary user interface and operating system failed to evolve. The company's initial advantage had become a liability as it contracted a severe case of not-invented-here syndrome.

Forces within the company advocated moving to more advanced GUI technologies such as QT or GTK, and strongly pushed for adopting an open source operating system. After all, the argument went, Garmin is a GPS device manufacturer and shouldn't be in the business of making partial re-implementations of technologies that are the expertise of industry giants, and that are used in everything from Tivos to tractors. Nonetheless, Garmin terminated these early projects, and many of the engineers and managers associated with them left for more innovate companies. Garmin management hoped that their pure-C RTOS and UI library would prove adaptable - in hindsight, and as their own invidious employees noted at the time, they were badly mistaken.

Today, Garmin finds that the advice it spurned just a few years ago has been eagerly adopted by a host of powerful competitors, while its own floundering attempts to catch up predictably fail. As if it were not unthinkably awful enough that Nokia bought Garmin's sole source of map data, Nokia also purchased Trolltech, the creators of QT. Worse, Android phones typically include turn-by-turn navigation software. Even yet worse still, this software is free as it is advertisement supported, and Android phones are typically free or sold at tremendous discount due to carrier subsidization. These final factors are entirely incompatible with Garmin's business model which depends on high initial MSRP and expensive map data upgrades.

Garmin has attempted to compete with Google Maps et all, but as I said, its failure was predictable. Garmin released an Android phone that was intentionally crippled, likely due to infighting of the sort that destroyed Microsoft's Kin. As with the Kin, retail display space was not secured for the Garminfone. As with the Kin, advertising was minimal. As with the Kin, the operating system was sabotaged: on release day, the Garminfone's OS was already a version behind. As with the Kin, existing high quality software was replaced with slipshod, half-hearted ports. Why use an Android port of the Garmin navigation software when it runs better on a real Garmin device? Why use the Garmin navigation software at all when Google Maps is much better polished, has more options, and is better integrated with the OS?

Only 20,000 Garminfones were sold in the 30 days after launch. Considering that 200,000+ Android phones are activated every day, Garmin's share in this market is microscopic. Even compared to the Windows Phone 7 marketshare, Garmin's phone marketshare is tiny, and WP7's marketshare is again minuscule next to the overall Android and iPhone marketshare. Given Garmin's track record, it is unreasonable to expect that they will change course. Their focus remains on proprietary products that require expensive updates; the Garminfone failure is but another in a long line stretching all the way back to GSM device projects terminated nearly a decade ago. Indeed, having kept my eye on this company since I purchased my eMap, it is clear that Garmin hires people with vision - who proceed to leave when their projects are canceled without explanation time and time again.

In part, Garmin's choice to go public is responsible for this. Only Garmin's assiduous maintenance of quarterly revenue supports their stock price. The moment investors doubt Garmin's strategy, Garmin's market cap diminishes and the company becomes vulnerable to acquisition. Garmin can't change strategies: if Garmin had bet the farm on the Garminfone, it still likely would have failed, and with greater impact. Garmin can't retreat: if Garmin had remained private as Matrox wisely did, Garmin could retreat to the niche markets where they remain strong. Matrox discontinued its consumer products and remains profitable in the medical imaging industry - an option denied to Garmin by investors who will hold the stock only while the company promises to grow. Any threat to the promise of endless future growth means the death of the company today.

I started thinking seriously about this again when a friend and I were in the car looking for a 24-hour Club Fitness location. He loaded the Club Fitness site on his Android phone and found a location. Tapping on the street address brought up Google Maps set to navigate us directly there.

In this instant, I realized that no 1st class Garmin device would ever be able to do this. My recently purchased Nuvi will probably be the last Garmin product I'll ever own. The last of its kind - vestigial... an anachronism bound for a box in the attic and replacement by more clever and versatile competitors. Garmin might surprise me yet, but then again, so might Commodore, GM, Palm, USR, Sun, SGI, McDonnell Douglas, Amiga, etc etc etc etc etc etc. I felt the same way about these other companies before they were acquired or simply faded away. My investments continue to do well, and I don't own any Garmin. Make of it what you will.

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