Why Did Garmin Develop a Smartphone?

It seems like everyone is jumping on the smartphone bandwagon these days -- first, Apple, then Google and now even GPS-maker Garmin. If you have watched any TV lately, you might have saw a new commercial for its Garminfone. Why is a GPS-maker getting involved in the smartphone market? Because it must.

First, here's the commercial if you haven't caught it:

My first reaction after watching the commercial was, "huh?" Garmin is a top GPS-maker, but that's a very different product from a smartphone. Sure, most smartphones have GPS capability these days, but that feature is relatively basic -- all you need is another antennae and someĀ mapping software. While it's easy to see how smartphone manufacturers could incorporate that innovation, it's a little harder to see how a GPS manufacturer could as easily produce a smartphone.

But since GPS's have become so common in smartphones, Garmin likely felt like it had no choice but try to evolve. In several years time, it's pretty plausible that almost all new phones will have GPS functionality. When that day comes, who will want to buy stand-alone units for navigation? Garmin is trying to plan ahead to ensure its survival when that transition occurs. But should it have acted sooner?

The smartphone market is arguably already oversaturated. While the Garminfone looks like a perfectly nice Android-based smartphone, it's hard to see how it could compete with some other devices out there by companies like Apple, HTC, Samsung, and others. According to the specs, it has only 4 GB of memory and a 3 megapixel camera. Yet at $199, it weighs in at the same price as the 16GB iPhone 4 with two cameras (up to 5mp, and HD video) for video conferencing.

Garmin serves as a prime example of a company relying on a product that became obsolete. The standalone GPS is too simple a device to survive in a world where all-in-one mobile devices are king. Although Garmin is smart to try to re-think its business model, building a smartphone from scratch is no small task. Naturally, its current phone appears to be geared to those who value a GPS above all else, which might not be a very large segment of the population. Although it's too early to count out its effort, Garmin has a challenging road ahead.