Garmin drops handsets in favor of APP’s- no news here, handsets are a tough business

Posted on October 27, 2010


SCHAFFHAUSEN, Switzerland & TAIPEI, Taiwan–(Release) — Garmin Ltd. (NASDAQ: GRMN) and ASUSTeK Computer Inc. today announced a strategic decision to alter their current co-branded business model for location-centric mobile handsets. The two companies will not introduce any new co-branded handset models going forward, but will continue to sell and support models that have already been introduced to the market. ASUS will design and manufacture new models of ASUS-branded mobile phones, some of which will include preloaded Garmin navigation and Location Based Service (LBS) applications. Garmin will expand its mobile handset application development and plans to offer navigation and other applications through certain consumer application stores.

Since the announcement of the Garmin-Asus strategic alliance in February 2009, the companies have developed and marketed six devices. These products are available through carrier and retail channels in a large number of countries. Customer support continues to be of utmost importance to Garmin and ASUS, and Garmin-Asus smartphone customers will continue to receive product support, software updates and/or downloads from either Garmin or Asus, depending upon the region.

Additional details about ASUS and Garmin’s future product roadmaps will be discussed during their independent third quarter earnings calls on October 28, 2010, and November 3, 2010, respectively.

(Fierce Mobile) Navigation solutions developer Garmin said it will expand its mobile application development efforts after agreeing to halt its branded smartphone partnership with manufacturer Asus. According to Garmin and Asus, they will no longer introduce any new co-branded devices moving forward, but will continue to sell and support the six handsets rolled out since the two firms entered into their strategic alliance in Feb. 2009. The companies promise Garmin-Asus smartphone users will continue to receive product support as well as new software updates and/or downloads–in addition, Asus will continue to design and produce new devices that will preload Garmin navigation and location-based services.

Details on Garmin’s revamped mobile services strategy are scarce, although the firm says it will offer its solutions “through certain consumer application stores.” Garmin adds will supply additional details on its plan during its third quarter earnings call on Oct. 28.

Garmin faces stiff competition in the navigation segment: The number of mobile subscribers using a turn-by-turn service or application increased 57 percent from the first half of 2009 to the first six months of 2010, reaching 44 million worldwide, according to data published earlier this month by business intelligence firm Berg Insight. Berg cites the broad availability of GPS-enabled handsets and attractive pricing plans as catalysts behind the growth, noting that in the U.S.–where GPS handset penetration tops 70 percent–about 8 percent of all wireless subscribers now rely on navigation solutions.

In response to free navigation services offered by mobile giants Google and Nokia , a growing number of operators worldwide are introducing bundled navigation services to offset end-user costs, Berg states. Navigation service providers and carriers also are seeking to monetize their solutions, introducing any number of personalization features and content up-sells–the report adds that because relatively few subscribers depend on turn-by-turn guidance on a daily basis, operators will look to complementary features like social networking, restaurant and event guides to improve stickiness and increase local advertising revenues.