By Jefferson Graham, USA TODAY
Garmin's new Nuvi 3790T GPS device is thinner than an iPhone, has a beautiful 5-inch LCD screen, can run traffic directions in 3-D, and easily slips into your pocket, making it perfect for use in the car or while walking.
It's arguably the coolest-looking GPS navigation device to date. But analysts who cover the two biggest navigation device companies, Garmin and TomTom, aren't sure that's enough. Within a few years, they contend, the GPS device will be overtaken by GPS apps in smartphones. Several models of phones with Google's Android operating system now have free turn-by-turn directions. And many apps are available for the iPhone to add turn-by-turn directions at a cost that rivals the purchase of a stand-alone device.
So should consumers still invest in GPS portable navigation devices? The manufacturers say reports of their potential demise are farfetched, and they're working hard to reinvent GPS with new models.
Take, for instance, Garmin's 3790T. It's meant for the car — but not always. "It's for driving or walking," Garmin Chief Financial Officer Kevin Rauckman says.
The new Nuvi will surely turn heads. But at $450, the price is much steeper than average for a GPS unit ($146 as of April, according to NPD group, down from $178 the year before).
Rival TomTom is reaching for the cost-conscious consumer with novelties. TomTom brought custom voices, including Burt Reynolds, Mr. T and Homer Simpson, to its line of GPS devices this year. Now it has matched forces with Darth Vader.
The villain from the Star Wars movies will tell you to turn left or right and that he's recalculating if you make a wrong turn, on devices that begin at $99. Later this summer, additional Stars Wars voices — including C-3PO and Han Solo — will be available, at $14.99 a pop.
Beyond voices, TomTom, No. 1 worldwide but No. 2 to Garmin in the United States, tried to get a leg up on its longtime rival late last year with an app for the iPhone that costs nearly as much as a dedicated unit.
The verdict: While TomTom Senior Vice President Tom Murray says the firm is happy with sales so far, the company believes that customers prefer a dedicated device.
With an app, the navigation pauses if the phone rings and you start talking, and it's a serious battery drainer, Murray says. "The audio quality you get from a navigation device is crisper and cleaner than what you can get on a smartphone," he says. "We want people looking at the road, not the device, so the audio is very important."
When Google first announced its plan to bring turn-by-turn directions to the Verizon Droid phone in October, Wall Street responded by sending Garmin's stock down $7 for the day: The new phone was a GPS killer, traders feared.
Google has since added its free GPS feature to all new editions of Android phones.
A funny thing happened on the way to the GPS cemetery. Sales, at least in the U.S., have remained strong. "We are slightly up for the year," TomTom's Murray says. "The data shows there has been no material impact from smartphones."
Garmin says sales in North America are up by single digits and projects that the industry will sell 35 million to 40 million GPS units this year.
According to the most recent figures from NPD Group, U.S. retail sales of GPS devices fell 16% to $267 million from January to April compared with the year before. Unit sales were up 3%.
The road ahead
Garmin is hedging its bets with a smartphone of its own. The first Garmin Nuvifone was released in 2009 to poor reviews: Critics praised the navigation but said it was a lousy phone. A sequel, the Garmin Fone, is set for release today, for $199 with a two-year T-Mobile contract.
"Many of the weaknesses of the original phone have been corrected," Rauckman says.
Garmin is using the Android operating system to run the phone, so there will be two levels of free GPS, from both Garmin and Google.
Garmin's maps are in stored memory. In areas with bad reception, the Garmin maps will pop right up; Google's might take more time to load, Rauckman says.
Mark Sue, an analyst at RBC Capital, says navigation units have faster response times than smartphones and result in more accurate directions. "Consumers will want the flexibility of navigation devices," he says.
Still, Rich Valera, an analyst at Needham & Co., says there's "no question" that GPS units are on the wane in favor of phone-based apps.
The negative issues of today — poor sound quality, navigation that ends with phone calls — will be addressed in coming years, he says. "Garmin's actions speak louder than words," he says. "It's spending tens of millions of dollars trying to develop smartphones."
By no means are GPS units going away tomorrow, he says. "But the trend is clear."
For consumers, that means lower prices. So have fun shopping.
Garmin's 3790T is meant for the car — but not always. "It's for driving or walking."
— Kevin Rauckman, Garmin chief financial officer
Garmin's new Nuvi 3790T GPS device is thinner than an iPhone, has a beautiful 5-inch LCD screen, can run traffic directions in 3-D, and easily slips into your pocket, making it perfect for use in the car or while walking.
It's arguably the coolest-looking GPS navigation device to date. But analysts who cover the two biggest navigation device companies, Garmin and TomTom, aren't sure that's enough. Within a few years, they contend, the GPS device will be overtaken by GPS apps in smartphones. Several models of phones with Google's Android operating system now have free turn-by-turn directions. And many apps are available for the iPhone to add turn-by-turn directions at a cost that rivals the purchase of a stand-alone device.
So should consumers still invest in GPS portable navigation devices? The manufacturers say reports of their potential demise are farfetched, and they're working hard to reinvent GPS with new models.
Take, for instance, Garmin's 3790T. It's meant for the car — but not always. "It's for driving or walking," Garmin Chief Financial Officer Kevin Rauckman says.
The new Nuvi will surely turn heads. But at $450, the price is much steeper than average for a GPS unit ($146 as of April, according to NPD group, down from $178 the year before).
Rival TomTom is reaching for the cost-conscious consumer with novelties. TomTom brought custom voices, including Burt Reynolds, Mr. T and Homer Simpson, to its line of GPS devices this year. Now it has matched forces with Darth Vader.
The villain from the Star Wars movies will tell you to turn left or right and that he's recalculating if you make a wrong turn, on devices that begin at $99. Later this summer, additional Stars Wars voices — including C-3PO and Han Solo — will be available, at $14.99 a pop.
Beyond voices, TomTom, No. 1 worldwide but No. 2 to Garmin in the United States, tried to get a leg up on its longtime rival late last year with an app for the iPhone that costs nearly as much as a dedicated unit.
The verdict: While TomTom Senior Vice President Tom Murray says the firm is happy with sales so far, the company believes that customers prefer a dedicated device.
With an app, the navigation pauses if the phone rings and you start talking, and it's a serious battery drainer, Murray says. "The audio quality you get from a navigation device is crisper and cleaner than what you can get on a smartphone," he says. "We want people looking at the road, not the device, so the audio is very important."
When Google first announced its plan to bring turn-by-turn directions to the Verizon Droid phone in October, Wall Street responded by sending Garmin's stock down $7 for the day: The new phone was a GPS killer, traders feared.
Google has since added its free GPS feature to all new editions of Android phones.
A funny thing happened on the way to the GPS cemetery. Sales, at least in the U.S., have remained strong. "We are slightly up for the year," TomTom's Murray says. "The data shows there has been no material impact from smartphones."
Garmin says sales in North America are up by single digits and projects that the industry will sell 35 million to 40 million GPS units this year.
According to the most recent figures from NPD Group, U.S. retail sales of GPS devices fell 16% to $267 million from January to April compared with the year before. Unit sales were up 3%.
The road ahead
Garmin is hedging its bets with a smartphone of its own. The first Garmin Nuvifone was released in 2009 to poor reviews: Critics praised the navigation but said it was a lousy phone. A sequel, the Garmin Fone, is set for release today, for $199 with a two-year T-Mobile contract.
"Many of the weaknesses of the original phone have been corrected," Rauckman says.
Garmin is using the Android operating system to run the phone, so there will be two levels of free GPS, from both Garmin and Google.
Garmin's maps are in stored memory. In areas with bad reception, the Garmin maps will pop right up; Google's might take more time to load, Rauckman says.
Mark Sue, an analyst at RBC Capital, says navigation units have faster response times than smartphones and result in more accurate directions. "Consumers will want the flexibility of navigation devices," he says.
Still, Rich Valera, an analyst at Needham & Co., says there's "no question" that GPS units are on the wane in favor of phone-based apps.
The negative issues of today — poor sound quality, navigation that ends with phone calls — will be addressed in coming years, he says. "Garmin's actions speak louder than words," he says. "It's spending tens of millions of dollars trying to develop smartphones."
By no means are GPS units going away tomorrow, he says. "But the trend is clear."
For consumers, that means lower prices. So have fun shopping.
Garmin's 3790T is meant for the car — but not always. "It's for driving or walking."
— Kevin Rauckman, Garmin chief financial officer