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Garmin mulls quitting smartphone market

by Sarah Griffiths on 13 September 2010, 10:51

Tags: Garmin

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Garmin is reportedly considering throwing in the towel on its ailing smartphone unit if it does not reap rewards soon.

The satnav giant will decide the fate of its smartphone branch over the next couple of quarters, Reuters reported.

Garmin's smartphone sales have topped just $27m in Q2, falling short of expectations, according to the firm's CFO, Kevin Rauckman.

"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. We'll have to make decisions within the next couple of quarters - whether we continue to invest or whether we pull back," he told the news agency.

Analysts had reportedly predicted that Garmin would have to shift around 1m phones a year to survive in the smartphone market, which in a double blow to the firm has also dented the satnav market as people increasingly rely on navigation tools built into their mobiles.

There are reports that Garmin and its rival Tom Tom have both suffered since Android and Nokia rolled out turn-by-turn map tools in late 2009, with Rauckman reportedly estimating that smartphone dominance is responsible for crushing annual satnav sales of 35m-40m by about 5m to 10m.

Global satnav sales are believed to have peaked in 2008 and are now expected to decline by 5 percent per year, according to Rauckman. While Garmin has tried to stay relevant by launching its own smartphones, Tom Tom has ploughed its efforts into moving towards ‘higher-margin, value-added services' and so it relies on satnavs for a smaller slice of its revenue.

Rauckman told Reuters unit growth in North America will be ‘very difficult' in the near term, while he is expecting to pick up some business in the smaller markets of Asia-Pacific and Latin America, which he believes Garmin will control a large share of.

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