{"id":14620,"date":"2016-11-17T15:30:55","date_gmt":"2016-11-17T20:30:55","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/youll-be-lost-without-it-the-rise-fall-and-rise-of-garmin\/"},"modified":"2016-11-17T15:30:55","modified_gmt":"2016-11-17T20:30:55","slug":"youll-be-lost-without-it-the-rise-fall-and-rise-of-garmin","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/youll-be-lost-without-it-the-rise-fall-and-rise-of-garmin\/","title":{"rendered":"You\u2019ll Be Lost Without it: The Rise, Fall and Rise of Garmin"},"content":{"rendered":"

2007: Garmin hits $3B in revenue, growing 80% YoY<\/b><\/h3>\n

By 2007, Garmin had grown from a start-up experimenting with\u00a0Global Positioning System (GPS) technology into an industry leader with $3.1 Billion in annual revenue growing at 80% YoY\u00a0[1]<\/a>[2]<\/a>! As Garmin’s tag line, “You’ll be lost without,” suggests, their customer promise was to provide customers with reliable on-the-go directions to their\u00a0destination. Garmin’s business model was selling GPS powered navigational devices with turn-by-turn directions\u00a0for drivers, boat captains and pilots. The devices varied in price from $200 to $600+ depending on functionality.<\/p>\n

\"screen-shot-2016-11-15-at-2-41-25-pm\"<\/p>\n

A changing context: The iPhone & the mobile revolution<\/b><\/h3>\n

\"articleinline\"<\/a>
Google Maps v1.0 for Mobile [NYT 10\/2009]<\/figcaption><\/figure>In June 2007, Steve Jobs and Apple released the\u00a0iPhone. Overnight, Apple had put the processing power of a computer into the pockets of consumers\u00a0and developers were finding innovative ways to combine iPhone sensors and computing power. In October 2009, Google announced the release of Google Maps for mobile which offered free GPS powered turn-by-turn directions, live traffic updates and the ability to recognize voice commands\u00a0[4]<\/a>.<\/span><\/p>\n

In response to the Google announcement, shares of Garmin plummeted 16%\u00a0[4]<\/a>. According to Dominique Bonte, an analyst with ABI Research, \u201cWith a free alternative that is just as good, I don\u2019t see much positive growth for … Garmin … why would you pay for something you can get for free?\u201d\u00a0[4]<\/a>. The analysts were right, the smart phone had replaced the need for specific navigational hardware making most of Garmin’s product line obsolete. <\/span>By 2010, Garmin’s 80% YoY sales growth had slowed to -9%, EPS growth was reduced to -15%\u00a0[2]<\/a>.<\/p>\n

Developing a new business model<\/b><\/h3>\n
\"garminasus-nuvifone-a50-front-back\"<\/a>
Garmin’s Nuvifone<\/figcaption><\/figure>\n

Competitors had found a way to deliver on Garmin’s customer promise in a cheaper, more effective way. In response, Garmin embarked on two approaches: first, to develop a superior product to Google Maps, and second, to develop another consumer application of their proprietary GPS technology.<\/span><\/p>\n

Garmin fights\u00a0to retake mobile<\/b><\/h3>\n

Beginning in 2008 Garmin produced a slew of innovative new products aimed at re-taking their leadership position in GPS powered navigation. Garmin\u2019s big bet in this space was Nuvifone – \u00a0a hybrid mobile phone that incorporated their GPS handset functionality. Unfortunately the Nuviphone was a massive failure. According to Julien Blin, principal analyst at JBB Research, Garmin\u2019s phone was a \u201cdesperate move.\u201d He explained, \u201cThe Nuvifone is around $300, and you can get an iPhone for\u00a0a comparable amount that can now do the same thing.\u201d[4]<\/a>.<\/span><\/p>\n

After failing to successfully create their own mobile platform, Garmin\u2019s shifted it\u2019s focus to build software for the Apple and Android platforms. Although Garmin did have a\u00a0mobile app, priced at $50, it had\u00a0little adoption. In 2014 Garmin launched a new mobile app called Viago for $0.99 with premium features available via in-app purchases. The premium features and lower price points were\u00a0not enough to overtake Google, and in 2015, in a sign of defeat, Viago was removed from the app store\u00a0[6]<\/a>.<\/span><\/p>\n

The rise of quantified self and internet of things (IOT)<\/b><\/h3>\n

In an effort to find other applications of their proprietary GPS technology, Garmin sought to build a line of wearable devices to capitalize on the\u00a0trend of wearable computing. The wearables market, comprised of smartwatches, fitness trackers and cameras, is projected to grow more than 18% in 2016 to $28 billion <\/span>[1]<\/span><\/a>.<\/span><\/p>\n

\"download\"
Garmin’s 2016 Vivo Smartwatch Product Line<\/figcaption><\/figure>\n

Garmin entered the fitness space in earnest when they acquired Dynastream Innovations in 2006, a Canadian company specializing in the field of personal monitoring technology and wireless connectivity solutions. By 2008 the fitness segment had reached over $400M in sales and contributed 12% of sales\u00a0[2]<\/a>. Fast forward to 2016 and Garmin is the hottest name in fitness wearables driven by consistent product innovation and\u00a0sleek design. Their Vivo smart watch won the Fitness Tracker of the Year at the Wareable Tech Awards 2016. According to wearable.com, \u201cthe review broke the record for an all-time high score for fitness trackers and for good reason: it’s all singing, all dancing and packed with tech.\u00a0[7]<\/a>\u201d In 2015, Garmin’s fitness segment had grown to over $1B in sales\u00a0[2]<\/a>. Garmin\u2019s stock has not recovered to its 2007 high, but the stock has appreciated over 40% year-to-date to $52.<\/span><\/p>\n

\"screen-shot-2016-11-15-at-3-43-00-pm\"<\/span><\/p>\n

Operationalizing innovation<\/b><\/h3>\n

Garmin has successfully pivoted it\u2019s business model, reducing it\u2019s reliance on traditional GPS powered navigation devices and into consumer wearable products. While the business transition was the most difficult part – the path forward is even more treacherous. Apple, Jawbone, Fitbit and others are all in the market – competition is fierce. In order for Garmin to compete successfully in this segment they will need to adjust their operating model to productionize innovation. In particular this means institutionalizing\u00a0a human-centered approach to design- moving through an exploratory phase, ideation phase, and then rapid prototyping to test.\u00a0 (792 words).<\/span><\/p>\n


\n<\/b>[1]<\/a>\u00a0Min Kao , Corporate Biography. garmin.com.<\/p>\n

[2]<\/a>\u00a0Garmin, 2015 10-k. sec.gov.<\/span><\/p>\n

[3]<\/a>\u00a0Trends: Why Garmin Stock is Crushing Apple Right Now. investmentu.com.\u00a0Tuesday, November 8, 2016<\/p>\n

[4]<\/a> Hurting Rivals, Google Unveils Free Phone GPS. nytimes.com. Oct 28, 2009.<\/span><\/p>\n

[5]<\/a>\u00a0Garmin Viago Navigation App Takes on Google Maps. techtimes.com. Jun 19, 2014.<\/p>\n

[6]<\/a> Garmin Killed It’s Viago App. androidpolice.com. May 15, 205.<\/p>\n

[7] <\/a>2016 Best Fitness Trackers. wareable.com. Nov 14, 2016.<\/span><\/p>\n

 <\/p>\n

Note: All market information sourced from Google Finance<\/p>\n","protected":false},"excerpt":{"rendered":"

Garmin invented GPS powered navigation in 1989, however, the introduction of the smart phone allowed competitors to offer better nav products for cheaper. 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