), a leading developer of personal navigational devices (PND) is
expected to face heightened competition from consumer electronics
) following the recent launch of its new mapping software for iOS
The new mapping software is based on 3D technology. The
application features turn-by-turn navigation system, real-time
traffic data and is capable of offering alternative routes
depending on traffic conditions. The software is also supported by
Apple's voice application Siri, which was launched with iPhone 4S
(on October 14, 2011).
Garmin enjoys a dominant position in the PND market space based
on its popular products such as nuvi, zumo and street pilot
application, all of which have been more or less represented in the
new iOS software.
Garmin has been seeing tough competition from mapping and
personal navigation software provided by
) for quite some time. This was primarily due to the strong
adoption of Google's Android-based smartphones. However, the
competition is expected to get more intense once Apple enters the
market with its new application.
We believe that the entrance of Apple poses a significant threat
for Garmin going forward. This is particularly due to the massive
popularity of Apple's iPhone and iPad devices. With the upcoming
release of its updated mobile operating system iOS 6, Apple is
completely removing the Google map service from its devices.
Being the market leader, Garmin is likely to be the most
negatively affected by the growing number of players in the
navigation segment. Of course, other players, such as such as
Harman International Industries Inc.
) will also not go unscathed.
We think that Garmin is in danger of seeing a secular decline in
demand for its GPS technology, which is rapidly becoming an inbuilt
portion of electronic devices like smartphones and tablets.
Garmin has been diversifying its business over the past few
years, although it continues to generate a significant percentage
of its revenue from personal navigation devices sold through its
Its efforts have resulted in greater stability and growth in the
outdoor, fitness and marine segments in particular. Garmin is also
well positioned in the aviation market, although recessionary
pressures have impacted this business.
Currently, both Apple Inc. and Google Inc. have Zacks Rank of
#2, implying a short-term Buy recommendation. On the other hand,
Garmin and Harman International have a Zacks Rank of #3, implying a
short-term Hold recommendation.
APPLE INC (AAPL): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
GARMIN LTD (GRMN): Free Stock Analysis Report
HARMAN INTL IND (HAR): Free Stock Analysis
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