TechPulse 360

Garmin's shipping department uses black shrink wrap to prevent theft

Here are some random thoughts gathered during my short visit at Garmin’s headquarters in Olathe, Kansas.

A retailer focus advertising strategy

The world’s leading GPS maker invests approximately 6% of its sales revenues in advertising, mostly in traditional retailers “co-op” ads. Although Garmin’s advertising budget as a percentage of sales keeps going down, the overall ad spent keeps going up. “It’s very important to keep a very strong advertising presence when a customer is ready to make that purchasing decision. When they’re in the buying environment”, said John Cassat, Garmin’s VP of Communications. If anything, the GPS maker intends to actually pour money into those “co-op” deals with retailers so they can promote Garmin’s products during this critical holiday season

The rise of the U.S. GPS market

The U.S. market for GPS devices or personal navigation devices (PNDs) is still growing at a rate of 80% per year, versus around 20% or less in Europe. If the growth persists, Garmin expects the U.S. market to be as large as the European market. Although the GPS maker didn’t says when but analysts suspect that this could come as early as next year.

The $1 billion Tele Atlas “bluff”

Last year, GPS maker TomTom went on a bidding war with Garmin to acquire map maker Tele Atlas. Although Garmin said it was never interested in buying Tele Atlas, it antes TomTom’s offer forcing the Dutch company to spend $1 billion more than expected to get Tele Atlas. Today, TomTom is in dire straits having to deal with a debt load of about… $1 billion!

Mio’s Stuff and Go strategy

According to Garmin’s VP of Worldwide Sales, Dan Bartel, Mio’s strategy is to come in strong during certain periods of the year, like the holiday season, “stuff” the channel with very cheap GPS devices and go! A strategy that leave some customers unhappy, not wanting to deal with another GPS device anymore. “And they are lost for everyone,” added Bartel.

Garmin has low expectations for its GPS smartphone, the nüvifone

I’ve wrote earlier here why I thought the nüvifone will not be a successful smartphone compare to let say, an iPhone, a Blackberry or even a Palm Treo/Centro. But after talking to the Garmin folks about it, I realise the GPS company has very little sales expectation for the upcoming nüvifone. Actually if Garmin can sale 1 million of these smartphone GPS, it might look small compare to the other competitive phones but quite a lot compare to Garmin GPS devices. So with such low expectations, the nüvifone might actually see the light of day and stay on Garmin’s books longer than I thought. Still, I think with technology improvement, the next generation smartphones from the large phone makers could match the nüvifone’s navigation and location-based functionalities.