Garmin weighing costs of phone division

General

In an interview with Reuters, Garmin CFO Kevin Rauckman was fairly candid when speaking about his company’s foray into the smartphone market place. “We’re pragmatic. If we end up ultimately not successful with units … we’ll have to sit back and evaluate that and consider making the best decision for our business,” said the CFO. Rauckman continued, “We’ll have to make decisions within the next couple of quarters — whether we continue to invest or whether we pull back.” The company’s total smartphone sales for Q2 of 2010 totaled just $27 million.

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27 Comments
  • DInc

    Who would have thought….hmmmm.

    • DInc

      On the bright side…at least they made $27 million rather than nothing. More than i would have thought hah.

      • webby

        That’s 27 mil in sales, not profits. Big diff, real big diff …

        No doubt they have lost a lot of money on this foray into smartfones.

  • Korger

    I wonder if that $27 million even covered R&D and advertising.

  • champ

    Perhaps if they hadn’t shipped with an archaic version of android with no upgrade path. The GarminFone is a slick looking device, but looks don’t account for everything.

  • sirpaul

    I didn’t even know they made phones.

  • Don

    How don’t even know what $27 million is in the telecommunications business, It seems a lot to me; but guess not.

  • chris

    Bottomline….with google navigation for free on most high end Android devices whats the point of Garmin phone? They should never even tried this. It was doomed from the start. Who is taking a garmin phone over an iphone4, high end android device, or maybe even a blackberry. There was no sex-appeal to this brand and ultimately not enough people care about true satellite GPS on their phone.

    stick to windshield units guys, leave the smartphones to the big boys.

    • tech junkie for life

      Fear of loosing the market all together i would say.

      Tom Tom went the software route already and has the jump on them, I guess they saw this as a way to differentiate but like you said they are about done.

  • debbie barnes

    THey need to invest in new innovation.

    • B

      no, they need to invest in old innovation.

      they should also try to make a profit.

  • Darnell

    I’m sure some Garmin employee is sitting back saying “I knew trying to make a smart phone was a bad idea, because the other big players already have it saturated”.

    Garmin should have kept making newer versions of their software that would work with iPhones, Android, WM and RIM. Along with their work on stand alone units.

    • http://www.smallfish-bigpond.com Kerensky97

      The problem is their whole business structure is out of whack now. I have a 1 year old Garmin Nuvi and it started prompting me to go online and upgrade my maps. I did so and after an nightmare registration process it told me I need to pay $79 for the upgraded maps.

      Not more features, just maps that aren’t out of date. Meanwhile Google is giving a better service away for free.

      Sorry Garmin, you’re done. Cash out now and leave while you’re still worth a few pennies.

  • doublejizzle

    We all knew this had fail written all over it just liken Kin. Garmin comes to market with a phone that has technology that is lagging behind the leaders and a high price.

  • Dara

    Garmin made an early foray into smartphones by producing a really good navigation app called Garmin XT.

    The only problem was that they were selling about 1 in 10 copies being used because they priced it too high and tied it to a SD card with map data that you had to pop in your phone whenever you wanted to use it.

    Because some people didn’t want to switch SD cards all the time or they owned phones that didn’t have a card slot, the program was cracked pretty early.

    Garmin eventually just pulled it from market because they had lost control and any work they were doing to keep it updated, they were basically doing for free.

    I think that they looked at how many people wanted their superior(by a mile) nav package and figured the only way they’d get paid is to be able to include it in the price of a smartphone.

    Of course, by that time, smartphones had begun to get subsidized and the carriers had their own ideas about crappy monthly sat-nav services.

    Garmin also couldn’t charge the premium prices that the big players could, so they couldn’t extract much money for their nav service above and beyond the price of the phone, even though they tried to pass off their efforts as a premium $martphone.

    Finally, both Nokia and Google started to give it away for free, which completely disintegrated their halo factor and probably their reason for even thinking about smartphones.

  • Eddie4

    I’m very disappointed with Garmin products. My nuvi 200 was lame. The google nav on my Droid X is way better, and does not ask me to make left turns on a bridge. The info google uses is pretty current too.
    My Garmin had restaurants that closed yrs ago and was missing a neighborhood that has been in place for near 12 yrs.

    • http://www.smallfish-bigpond.com Kerensky97

      I had the same problem, now I have a regular 2 week nag screen to go online and pay $70 to update the info. I made a rant post on my blog about it. Now that I have a car charger for my Incredible I have a Garmin for sale.

  • doublejizzle

    I like Garmin portable units. I love their touchscreen interfaces and think they are the best out of the offerings (Tom Tom, Magellan, Garmin, etc). However, with Google maps on Android with free turn by turn, I am hard pressed now to even use my Nuvi. I use the stock nav in my suv which i only use because it is dedicated, but in my car without nav, often my google Nav is more current and just as good as my Garmin Nuvi.

  • Mark

    If they think that if they exit the software side, their hardware will pick back up they are stupid. Unless they are going to convince Tom Tom, Navigon, Google, etc. to also pull out of providing gps devices for peoples gps enabled phones.

    The writing is on the wall, stand alone gps devices are mostly dead in the water, and they need to go pure software and price it at a more appealing point and take a lead on features.

  • Miggy

    There are some things even Android can’t save from fiery depths of eternal damnation.

    This can join the Behold II and Cliq in Beelzebub’s Bargain Bin.

  • Mgl

    They should develop an app for the iphone. tom tom made a million dollars with their apps and making much more as time goes by.

  • Usman

    Isn’t this the company that charges to update the maps on their gps units? What made them think a company that nickles and dimes its customers could possibly compete? Their reputation is that of an outdated device with an outdated business model. They’redinosaurs.

  • NuShrike

    In a few quarters is way too slow to react. Garmin has failure baked in now.

  • namelesstwo

    The Garmin phone had a big failed sign written all over from the moment it came out. Those who bought them and contributed to the $27mils, will have to use ‘em as doorstops.

  • JBDragonq

    Did anyone other then Gamin think this would have ever worked? I’ve been using GARMIN’s for years, BUT once I got my Iphone4, I got Navigon for it, which I think is far better then my Nuvi 780 other then the smaller screen. Garmin should have been right there with some great Iphone software like TomTom and Navigon. Instead they went this DUMB route. I guess Garmin want to keep making the Hardware also, but it’s just dumb. Make the BEST software GPS and people will buy it even though there are FREE options.

  • kegman

    in 10 years no one will remember garmin

  • Should have seen this coming…

    Can anyone say Arrogance?
    Garmin, based in Olathe, KS (right next door to Overland Park, Sprint’s headquarters) has an unwritten rule that they will not hire anyone from Sprint.

    Do you think that there might have been a few people from Sprint that understand the market dynamics that could have helped Garmin’s efforts?

    Garmin – you should have brought on some people that understand this extremely complex and fast moving market rather than trying to do it on your own, based on what your engineers thought people would like!

    Just my two cents….

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