Skip navigation


Current DateTime: 09:15:22 09 Feb 2012
LinksList Documentid: 35687108
  • 15 Influential Innovations

      We decided to take a look at great innovations of the recent past. So, which 15 innovations have changed the way we live?

  • Top Ten States For Technology

      States like to promote themselves as fertile ground for innovation — so we put those claims to the test.

  • World's Most Liked Brands

      What are the most “liked” brands on Facebook, and what are they doing to maintain such a massive following?


Current DateTime: 09:15:22 09 Feb 2012
LinksList Documentid: 23452764
Expiration DateTime: 2/9/2012 9:18:24 PM

MOST SHARED


Current DateTime: 09:15:25 09 Feb 2012
LinksList Documentid: 31330905
Expiration DateTime: 2/9/2012 9:18:45 PM

MOST POPULAR


Current DateTime: 09:15:29 09 Feb 2012
LinksList Documentid: 35819650
    • Road Warriors

        All the gadgets and gear a savvy frequent traveler needs to navigate the global economy.

HOT ON FACEBOOK

How the Droid and Google Threaten the GPS Makers

Published: Wednesday, 11 Nov 2009 | 6:52 PM ET
Text Size
By: Chris Morris
Special to CNBC.com

Apple may dominate the smart phone market, but Motorola and Verizon have made some big waves in the industry lately.

Motorola Droid
Source: Motorola
With free navigation being offered on cell phones, navigation companies face a long-term challenge.

In its opening weekend, the Droid — Motorola's [MOT  Loading...      ()   ] new smart phone running on Verizon's [VZ  Loading...      ()   ] cellular network — has sold nearly 100,000 units, says Broadpoint AmTech analyst Mark McKechnie. And demand seems to be holding fairly steady.

Apple [AAPL  Loading...      ()   ] investors aren't too worried about the fate of the iPhone. The 3GS, after all, sold 1 million units in its first weekend in June. GPS makers' stocks, however, haven't been so lucky.

Garmin [GRMN  Loading...      ()   ] shares were trading in the $38-$39 range until Oct. 28, when the Droid was formally announced. The cell phone includes a free GPS service from Google [GOOG  Loading...      ()   ] called "Google Maps Navigation." Within days, the stock closed at under $27. TomTom shares were similarly affected.

It's not the Droid per se that has investors nervous — it's the operating system running the phone. Google's Android OS is customizable, cheap and has become a playground for the Internet giant to experiment with new features. The free GPS is the most notable of those to date.

"People are trying to weigh the threat posed by this — not just one device on one network, but the potential of [free GPS] being pervasive over time," says Jeff Rath, global head of technology research for Canaccord Adams.

Garmin's stock has rebounded over the past few days, as investors recall the company has beaten expectations for the past two quarters and decided the perceived threat is less important than actual cash flow.

In the long term, though, there could be legitimate cause for concern. Before the Droid's free GPS hit the market, there were two map providers for GPS devices — Navteq (owned by Nokia [NOK  Loading...      ()   ]) and Tele Atlas (owned by Tom Tom). Any GPS on the market leased maps from one of these two companies — and had to pay a hefty license fee to do so.

Google bypassed the providers, using its own maps instead — and that's a move that caught the GPS industry off guard.

"It's a huge change to the industry — going from a duopoly to the introduction of a disruptive third party," says Rath. "On a cost basis, not only is there a competitive threat, but now Google has a cost advantage as well … How is Garmin going to compete?"

The free GPS service will likely eventually spread beyond Droid — especially as Android gains a foothold in the smart phone (and possibly tablet) market.

Google has also reportedly expressed interest in making the app available on the iPhone — which would be a significant competitor to existing GPS apps, including one from TomTom that sells for $100.

Some of the recovery in GPS stocks could also be tied to investors finally getting hands-on time with the $200 Droid.

Many tech enthusiasts and tech sites are swooning over the phone — Gizmodo wrote, "It's this simple: If you don't buy an iPhone, buy a Droid." Some more typical consumers, though, feel it needs more refinement before it becomes a true "must have." Subtle things, like the lack of a springy "snap" when the keyboard is opened and the layout of the Android OS, have drawn some criticism.

Those flaws are easily corrected in future versions, though — and that's when analysts say the threat to GPS makers will become particularly pronounced.

© 2012 CNBC.com


Current DateTime: 11:43:35 09 Feb 2012
LinksList Documentid: 29778428

Current DateTime: 11:56:47 09 Feb 2012
LinksList Documentid: 29779196

Current DateTime: 03:24:57 09 Feb 2012
LinksList Documentid: 29779197

Current DateTime: 01:22:58 09 Feb 2012
LinksList Documentid: 29779199
CNBCCNBC
About CNBC  |  Site Map  |  Video Reprints   |  Advertise  |  Help  |  Contact
Privacy Policy  |     |  Terms of Service  |  Independent Programming Report
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2012 CNBC LLC.  All Rights Reserved.
A Division of NBCUniversal
Thomson ReutersThomson Reuters